Canadian Industrial Outlook: Gas Extraction—Summer 2017

Prices—Canadian natural gas prices are expected to improve in the coming years. Strengthening linkages between global and North American benchmarks along with a resolution to infrastructure issues in Western Canada and improved access to Ontario’s Dawn Hub will support higher prices going forward.

Dawn Long-Term Fixed-Price (LTFP) Service—The Dawn LTFP service agreement between TransCanada and various shippers to move 1.4 billion cubic feet per day of natural gas from Western Canada to southern Ontario’s market/storage hub over the next 10 years is good news for Canada’s gas extraction industry. However, analysis indicates the deal will have only a slight impact on overall production levels.

Domestic Market—Although Canada’s natural gas market has expanded robustly over the past decade, the impact of carbon-pricing policies and changing end-use technologies may limit future demand growth prospects.