Natural Gas:

Natural Gas - Wikipedia

Alberta has seena drastic reduction in activity through 2007 for several reasons:

Royalty hikes announced by the provincial government in November
(and expected since a Review Panel was commissioned in February),

The strong Canadian dollar, High costs of drilling, Recent high costs of land, and A lack of liquefectation plants in the area (the nearest plants for export are in Alaska).

The sector as a whole has faced a reduction of over 40% (compared with the same time last year) and in investment terms, Alberta has one of the lowest Internal Rates of Return (IRR) of any natural gas producing region in the world (at roughly 12%, vs. 39% for China).

There is now a confluence of factors and circumstances that are
beginning to generate new opportunities. Finding natural gas in Alberta is
getting cheaper and cheaper, benefiting companies with cash that are not
weighed down with existing Alberta investments. Key factors that affect
economics are summarized below.

Decreased cost of drilling across the natural gas industry in Alberta –
from roughly $18,000 / day (per rig) to $16,500 / day at the beginning
of 2007. This is so because natural gas drilling accounts for most of the
drilling in Alberta and the reduction in activity has driven drill
utilization to its lowest since 1992, at 40%. Forecasters are predicting
2008 to remain even lower, at 34%. Drilling costs are expected to
decrease to under $14,000 / day per rig, or less, depending on what
occurs with drill utilization and competitive considerations.

The imminent decrease in costs of land –some companies paid over
$1,000/hectare through 2006, when the spot price for gas hit its highs.
This trend is already beginning to be felt – in October, 2007 price paid
was $268 / hectare, representing a saving of over 50% compared to the
average bonus bid price paid in 2006.

Index of Alberta Natural Gas Juniors