Traditional markets for western Canadian natural gas are changing.
Traditional markets for western Canadian natural gas are changing; exports to the United States, Canada’s only export market for natural gas, have dropped 17 per cent over the past five years and are projected to drop further because of the U.S.’s own growing supply.
In the major eastern Canadian markets, western natural gas competes against supplies from the U.S. that are closer. In 2014, Canada imported 0.8 tcf of natural gas from the U.S. (Source: NEB)
Canadian energy for Canadians
While shipments of western Canadian natural gas have been declining to eastern Canadian markets, the trend does not need to continue. Responsibly developed Canadian natural gas can continue to serve markets in eastern Canada using existing infrastructure. That’s why natural gas producers are currently exploring market opportunities with transmission pipelines to make western Canadian natural gas more competitive in those markets. An agreement would benefit consumers and governments across the country.
Experience shows that having multiple supply sources is a key component of a sound energy strategy. In fact, this will provide a reliable natural gas supply alternative, lower the risks associated with depending on a single source of supply and enhance energy security with pan-Canadian benefits.
Market opportunity with LNG exports
World trade in LNG has more than tripled over the last 20 years, growing from 8.5 Bcf/d(billions of cubic feet per day) in 1994 to nearly 32 Bcf/d in 2013. Although growth has stalled in recent years, it is anticipated this market will resume its rapid expansion as improved natural gas production technology means more gas reserves worldwide are available for development and demand for energy, particularly from less-emitting sources, is expected to grow. Canada has large unconventional gas resources, and with growing competition in North America, Canada’s natural gas producers are examining global opportunities as they develop their plans to exploit these resources. (Source: BP Statistical Review of World Energy)
Current LNG consumers are mainly found among the economies of Asia, as well is in a number of the more developed Western European countries. Some LNG is also imported into North and South America. The Pacific Basin, which includes the economies of Asia, comprises the largest consuming region. It is also expected to exhibit the highest future growth rate, given the underlying strong economic growth of the countries in this region and their burgeoning demand for energy.
Canada’s potential participation in the LNG market is driven by a number of factors, most notably:
- The large resource base located near the country’s West Coast
- The proximity of Canada’s West Coast to Asian markets
- An infusion of foreign investment from countries that consume LNG
- The need for Canadian producers to increase their market diversification
- The desire to access markets with higher net back potentials given the relatively low natural gas prices currently found in North America.
On Canada's east coast, the prospect for LNG exports is also emerging given its favourable location for serving European markets and the presence of a natural gas pipeline grid that provides access to growing North American production for feedstock for plants in this region (Source: CAPP - An Overview of the World LNG Market and Canada’s Potential for Exports of LNG, 2015).