Canadian Manufacturing

Canadian natural gas industry in transition: CBOC

Canada’s share of natural gas production has fallen from 25 per cent of the North American total five years ago to less than 20 per cent



OTTAWA—Canadian natural gas production will continue to fall over the next five years, according to a new report by The Conference Board of Canada (CBOC).

The outlook for the natural gas extraction industry suggests drilling activity in Alberta is expected to rise moderately over the next five year, but not enough to offset declines from existing gas connections in the province.

Alberta’s production is forecast to fall by 20 per cent over the next four years.

Large increases in British Columbia–largely due to shale gas production—and a new offshore site in Nova Scotia will help slow the decline in Canadian production.

Other than in British Columbia, shale gas remains in the early stages of development across Canada.

Overall, Canadian production has fallen from 25 per cent of the North American total five years ago to less than 20 per cent.

“Barring any unexpected situation that would cause prices to spike, profits are unlikely to return to pre-recession levels until beyond the medium term,” says Todd Crawford, Economist.

Pre-tax profits in the industry totaled $616 million last year—compared to more than $8 billion in 2005. Even though prices remain weak for the third consecutive year, profits will rise to $744 million this year.

The economic recovery is expected to take firmer hold next year and growth in U.S. gas production is forecast to slow. As a result, prices are expected to see some moderate improvement through 2015, which will be the main source of revenue growth.

But costs are likely to re-emerge as a key issue for the industry, especially in Alberta, where it is in competition with the oil industry.

Click here for the full report.

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