Canadian Manufacturing

Linking Canadian production to global market ‘vital’ to country’s natural gas industry, CAPP says

Report notes window of opportunity for Canadian NG will not last forever

CALGARY—Canada needs to connect to global liquid natural gas markets to avoid a decade of decline in natural gas production, the Canadian Association of Petroleum Producers said July 15 in its 2015 natural gas forecast and LNG report.

“Accessing the global LNG market can strengthen the long-term viability of Canada’s natural gas industry and backstop the significant economic benefits it creates for Canadians,” CAPP president and CEO Tim McMillan, said.

The CAPP forecast shows that U.S. natural gas supplies are displacing western Canadian gas in the traditional markets of Central Canada, the U.S. Midwest and U.S. Northeast.

Without access to global LNG markets to stimulate production of Canada’s more-than-100-year natural gas supply, production will decline steadily over the next 10 years, then remain flat at about 13 billion cubic feet per day until the end of the current forecast period in 2030, the report found.

But with access to global LNG markets, Canadian production could recover to current levels of 14.5 billion cubic feet per day by the end of this decade, CAPP said. As LNG export facilities are developed, natural gas demand to fuel these plants could raise production to 17 billion cubic feet per day by 2030.

As a result, CAPP said Canada needs prompt regulatory approvals and a commitment to competitiveness in order to attract the billions of investment dollars required to build an LNG business and expand natural gas production to support it.

“Proposed LNG projects require timely political and regulatory decisions because global LNG competition is fierce and involves many well-established international suppliers,” McMillan said.

While legal challenges and political debates around major pipeline projects continue, natural gas – in its compressed form – is finding an increasing role in Canada as a transport fuel. Companies across the country have begun retrofitting old diesel truck fleets with compressed natural gas, which releases fewer greenhouse gas emissions. Nevertheless, after years of decline, a sense of urgency to expand beyond Canadian borders is beginning to emerge in the natural gas industry.

“The window of opportunity for Canada’s LNG market will not stay open forever,” McMillan noted.

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