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Case Studies 

Natural Gas Heat Content Forecast

Canada / 2021 / Transaction Advisory

Sproule’s robust technical and commercial analysis allowed the client to effectively bookend their expectations for heat content of the natural gas flowing through their system out to 2035.

Project Highlights

  • North American Infrastructure company was concerned about rising heat content on their natural gas pipeline system
  • The region supplying natural gas to the client’s infrastructure covers over 7 million acres and is developed by 11 mid-to-large cap E&P companies
  • Leveraging data analytics and visualizations, Sproule evaluated the supply region for heat content, development inventory, and future drilling activity
  • Sproule provided the client with a clear view of natural gas supply and heat content expectations over the forecast period

Challenge

  • Major North American Infrastructure client was concerned with the rising heat content of natural gas flowing through their system.
  • From 2015 to 2020, low gas prices caused western Canadian producers to shift their focus towards liquids rich regions within major natural gas plays. The result was increased heat content gas flowing onto the client’s pipeline system.
  • In order to manage pipeline specifications and downstream customer expectations, the client required an in-depth study of natural gas supply to 2035, with a focus on how heat content is expected to change across the forecast period.

Solution

  • Under four different commodity price scenarios, Sproule developed a 15-year natural gas supply and heat content forecast. This was achieved by breaking the supply region into 18 different sub-areas based on heat content. For each sub-area, Sproule determined type curves, development inventory, and future drilling expectations by operator. These forecasts were then combined to create the total 15-year natural gas production supply forecast with associated heat content forecast.
  • Sproule’s technical experience evaluating natural gas assets as well as our proficiency in data analytics and visualization software streamlined the process and allowed our client to visualize key heat content trends across the regions supplying their infrastructure.

Value

  • Sproule’s robust technical and commercial analysis allowed the client to effectively bookend their expectations for heat content of the natural gas flowing through their system out to 2035.
  • In addition to heat content expectations, Sproule’s results provided the client with a view of the potential development plans of the E&P companies active in areas surrounding their infrastructure.
  • Sproule’s forecast presentation allowed the client to have informed discussions regarding natural gas supply and heat content expectations with their shippers as well as downstream customers.



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Sheldon McDonough
Managing Director, Energy Advisory
Liam O’Brien, P. Eng.
Petroleum Engineer

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