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Canadian Industrial Outlook

Gas Extraction

This report examines the short-and medium-term economic and profitability outlook for Canada’s gas extraction industry.

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Download the Winter 2019 Outlook

Published: March 2019 (18 pages)
By: Klaus Edenhoffer


Prices Remain Weak—Booming shale gas production in the U.S. is dampening the prospects for price growth. In addition, the differential between Western Canada’s benchmark price for natural gas and its U.S. counterpart has been increasing with the constraints on pipeline capacity, similar to the situation faced by oil producers.

Drilling Activity Is Down—Weak gas prices are weighing on the outlook for industry profitability. In the 2018–19 winter drilling season, drilling of new gas wells was down 23 per cent year-over-year, and we expect drilling activity to decline for 2019.

Investment Is Driven by Large Projects—Capital investment will hinge on the progress of two major projects—the $40-billion LNG Canada project in B.C. and the $10-billion Goldboro project in Nova Scotia, both of which will be fed with gas from Western Canada. If successful, these projects will allow Canada to ship liquefied natural gas (LNG) to new markets overseas. That would boost revenues and help to stimulate further capital investment in the industry.