You need to know the decline from all existing wells, which is less than the new ones... If drilling activity drops 100%, production will not decline 40% because the avg well declines say 25%. In this case, and given that canadian production was previously flat yoy, a 25% rig reduction results in a 6% decline, or, with half exported, a 12% decline in exports, say 400bcf.

The 160 canadian rigs didn't disappear, they migrated south. US avg in 06 was 1290, now 1440. Nice of them, we need around 10% more each year to stay even; however, as you note, canadian production is going down, and meanwhile tar sands will take maybe 300bcf more in 07. My latest guess is that canadian exports will decline 700bcf...

Where can you get current canadian production numbers?

I think that's exactly what I said (you say 12%, I say 12%), isn't it? I probably did overplay my hand a bit, but if drilling activity drops to nothing, the production will go down somewhere in the neighborhood of 40% - take a look at this (albeit for the US) -

Follow the line downward from 2004 to 2005 (i.e., no drilling), and you find that roughly 20 bcf/d out of the 50 bcf/d has vanished, i.e., 40%. Part 2 of my comment suggests that all these rigs are being dumped into the US just to maintain production, so the loss will still be there.

The most current Canadian numbers I used were EIA, but I'm sure there's a source in Canada that's more up-to-date.

Thanks for posting the chart. I've seen it before, but printed it this time.
I think you might be looking at 2 years... 32% means what it says, look at the slope of the line dividing 05 and 06.
If canada is the same, and if they previously had enough rigs to hold production steady around 6600 bcf, then a loss of 25% rigs will cut yoy production 8%, or around 500bcf. Of course this means that exports will go down this amount plus any increased consumption, and I separately heard that tar sands will soak up at least 300bcf more this year, so I now expect exports down 800bcf, a little less than my earlier guess of 1tcf.

Also worth noting that every year new wells decline at faster rates as we drill into eg tight sands, so even tho production has held steady on account of more rigs drilling more holes the slope is steepening, exlaining why we need more rigs every year. The trend averages 1% higher/y since 1990, but is accelerating, from say .5% higher/y to over 1% higher/y now. IMO we are the coyote that ran off the cliff, and is just now beginning to look down.

http://www2.nrcan.gc.ca/es/erb/prb/english/View.asp?x=449 has some useful Canadian natural gas production numbers. They have a different pdf file for each month.

I notice that the data source you give shows that US natural gas imports from Canada were down 5% for the year 2006, compared to 2005. This was before the drop in rig counts.

It should be an interesting year. We should be able to tell by mid-summer if Saudi Arabian oil production has peaked, because inventory draw-downs cannot continue for long and they will likely be called on to increase their production to meet rising demand. In the same way, we should learn the truth about our natural gas production situation.

Natural gas in storage last week was at 1516 Bcf, 11.6% above the five year average, which would be 1358 Bcf. This comfortable number is still well below last year's figure of 1840 Bcf. If Canadian exports to the U.S. continue to fall by 5%, that would be a drop of 18 Bcf per month. If U.S. production continues to fall by 2%, that will cost us another 40 Bcf per month. This means that in less than three months we are likely to drop down to the five year average, and by the beginning of the winter we will drop below the bottom of the average range, which would be a bad thing. The decline figures of 5% for Canadian exports and 2% for U.S. production are not especially high estimates, as previous TOD posts have postulated U.S. production declines in 2007 as high as 7%.

With winter ending, the natural gas storage numbers will not be pushed around as much by the weather, and we should be able to track the supply and demand situation fairly closely. There will be a clear call for more North American natural gas this year. We will see if it can be delivered.

I don't think us ng production will decline this year, rig count is up enough to maintain prod. However, the rigs came from canada, now down 25%. Their production looks to me to be down 8%, or 500bcf, and with tar sands increased demand 300bcf would mean exports down 800bcf, but accelerating into winter.