The US Energy Information Administration reported that Canada’s National Energy Board (NEB), in a recent publication projects that both Canada’s natural gas production and consumption will increase through the next decade.
The report, "Canada’s Energy Future 2016: Energy Supply & Demand Projections to 2040," cites that with the decline of natural gas exports to the US, the planned construction of LNG export terminals on Canada’s western coast—which would send LNG to Asia by 2019—plays a key role in maintaining Canada’s overall gas exports.
The report also shows that LNG exports will be the primary driver for growth of Canada’s gas production.
The increase in drilling of deep tight and shale gas wells, along with technological improvements in drilling practices, has increase the productivity of new wells in western Canada. The report expects Canada’s gas production to reach nearly 18 bcfd by 2025. Tight natural gas accounts for 70% of projected production in 2025, and most of this gas is from the Montney formation in British Columbia and Alberta, where production is projected to triple to 9.6 bcfd from 3 bcfd between 2014 and 2040. Production growth also occurs in the Alberta Deep basin (tight) and the Horn River basin (shale). These increases offset the decline in production from other resources.
Canadian gas consumption also is projected to rise, reaching 16.4 bcfd by 2025 and 18.6 bcfd by 2040. The industrial sector, which includes refining and exploration, is the primary driver of this growth, as well as the largest consumer of gas. Oil sands operations alone currently account for 20% of Canadian gas consumption. By 2040, the report expects oil sands production to more than double to 4.8 million b/d, consuming 3.4 bcfd of gas. Another source of gas demand growth is electric power generation with consumption rising to more than 3.2 bcfd by the end of the projection period.
Net exports to the US have decreased from a high of 10.6 bcfd in 2007 to 7.4 bcfd in 2014. The report expects that Canadian gas net exports to the US will fall to 2.5 bcfd by 2025, and become negligible by 2040. With the continued development of US shale resources, such as the Marcellus, the US now relies less on Canadian imports to meet demand. By 2040, the report projects that US gas exports to eastern Canada will largely offset Canadian gas exports to the US.
LNG exports are expected to be the primary driver of Canadian natural gas production growth. NEB analyzes two additional cases in CEF to explore the impact of LNG exports on production. In a low-LNG case, where no liquefaction facilities are constructed, production remains at the 2015 level of 15 bcfd through 2040. In a high-LNG case, where LNG exports reach 4 bcfd by 2023 and 6 bcfd by 2030, production increases to 22 bcfd by 2040. Based on these results, the report anticipates that future Canadian natural gas production growth will rely on the construction of LNG export capacity.