The North American shale gas boom and low domestic natural gas prices have lowered profits for the natural gas distribution industry in Canada over the past five years, according to a new research report from IBISWorld.
The falling natural gas prices have led government utility regulators to lower gas rates residents pay, and wholesale gas prices saw a decline. According to the IBISWorld report, natural gas industry revenue will likely fall nearly 9 percent per year to $18.3 billion over the five-year period ending in 2013.
However, IBISWorld expects this downward trend to reverse after this year. Pipeline infrastructure expansion will likely push Canadian gas prices up because the pipelines will make it easier for gas extractors to send product to international markets.
"As a result, domestic gas prices will converge upward to global gas prices," said IBISWorld Industry analyst David Yang.
Wholesalers will also benefit from the pipeline expansion because it will make it easier to transport gas across Canada.
Timothy Egan, president and CEO of the Canadian Gas Association, said the industry is committed to expanding the pipeline infrastructure safely.
"Whether it is new construction, roadwork, or homeowners planning backyard projects, all excavation and digging projects need to be done safely," he said. "The natural gas distribution industry has long-championed and is committed to continuing to support damage prevention and safety initiatives."