Canadian Industrial Outlook: Gas Extraction—Winter 2017
This report examines the short-and medium-term economic and profitability outlook for Canada’s Gas Extraction Industry.
- Recovering Prices—In 2016, North American natural gas prices were at their lowest since the turn of the millennium. Over the forecast, a rapid increase in U.S. exports should help lift Henry Hub to close to US$4 per MMBtu and AECO-C to near the C$4 mark by the end of 2021.
- Flat Regional Demand—North American natural gas demand is expected to remain relatively flat over the outlook. Although natural gas use in Canada will increase, these gains will be insufficient to offset a decline in use in the U.S. where low coal prices and improving competitiveness for renewables will weaken the power sector’s demand for natural gas in the coming years.
- Rising U.S. Exports—Liquefied natural gas (LNG) exports to overseas markets and pipeline exports to Mexico are expected to increase over the forecast. While U.S. LNG export projects are competing directly with proposed LNG export projects in Canada, they will benefit Canadian producers over the coming years by supporting a need for Canadian gas. Some Canadian producers are signing contracts to export gas as LNG via the U.S. Gulf Coast.