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AXcess News: Natural Gas Exploration Shows Promise in the United States and Canada.

NEW YORK -- Last week, the U.S. Senate passed a bill that will allow exploration in the Gulf of Mexico for oil and natural gas, and in Canada. The hunt for natural gas could resume in the Fort Liard area of the Northwest Territories as the federal government prepares to open land for exploration for the first time in a decade.

While both markets show promise for exploration, politics plays a key role in developing them. In the United States, the House of Representatives wants to open more coastal areas for exploration and development, which has environmentalists and some lawmakers vowing to fight tooth and nail to prevent it.

In Canada, the Acho Dene Koe Band in Fort Liard have fought against natural gas development, but with demand outweighing conservation, the tribe is giving way to issue exploration rights which are slated to begin next month.

While stocks of natural gas are at a 5-year high in the United States, the market demand is estimated to grow at a 2 percent rate, and with crude oil trading at record prices, many consumers, both commercial and domestic, are looking to switch to natural gas, and in time those strategic reserves will begin to thin out. In Canada, strategic stockpiles were already nearly filled to capacity last month, and in Alberta, many companies have been drilling new wells that can fill the growing demand in both Canada and to its neighbors in the south.

Pipelines remain the key aspect of moving those supplies to market. Today, El Paso Corp. reported that it swung to a second-quarter profit, thanks to strength in its pipeline business. El Paso posted a profit of $150 million, up from a year-ago loss of $238 million.

Last Thursday, TransCanada Inc. reported a second-quarter profit of $244 million, up from $200 million a year ago, due to higher earnings from its energy business. TransCanada is working to build a pipeline to supply U.S. refineries in the Midwest, having gotten clearance to reallocate some of its pipeline capacity coming from the Alberta oil and gas fields into other lines, to make room for supplies for that Midwest pipeline slated to be open in 2008.

In the microcap arena, Patch International Inc. (OTCBB: PTCH) has had a busy month in July, announcing several gas well exploration developments underway, but as yet there has been no news on those results. Patch has been viewed as a "little darling" in the Alberta oil sands properties, as a small, yet shrewd bidder, but with the advent of the drilling season there, the company has become tight-lipped over its lucrative oil sands developments.

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Comment:AXcess News: Natural Gas Exploration Shows Promise in the United States and Canada.
Publication:Business Wire
Geographic Code:1CANA
Date:Aug 8, 2006
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