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Providing coverage of Alaska and northern Canada's oil and gas industry
February 2009

Vol. 14, No. 5 Week of February 01, 2009

Canadian gas heads for trouble

Canadian natural gas exports to the United States edged up in the 2007-08 contract year that ended Oct. 31, reaching 3.71 trillion cubic feet and setting a new high for revenues of C$33.11 billion, the National Energy Board reported.

But, along with the impact of the economic downturn, surging output from U.S. shale plays is expected to take a major bite out of those numbers.

Compared with 2006-07, volumes were up about 1 billion cubic feet and revenues grew by C$5.24 billion. The previous record was C$33.09 billion set in 2004-05.

Average export prices for the sales year were C$8.27 per gigajoule, compared with C$6.98 in 2006-07 and C$7.85 in 2005-06.

For the 10 months of the 2008 calendar year through October revenues rose by C$5.2 billion to C$28.12 billion, while average prices climbed to C$8.69 from C$6.85.

Exports for the month were down 5.4 percent in the U.S. Midwest at 121.8 bcf and 6.3 percent in the U.S. Northeast at 93.1 bcf. For the 10 months of 2008, the Midwest shipments dipped to 1.255 tcf from 1.258 tcf and to the Northeast to 967 bcf from 1.085 tcf. But six straight months of declining volumes saw exports in the January-October period slip to just under 3.02 tcf from 3.11 tcf and October exports slumped 11 percent to 278.4 bcf.

The U.S. Energy Information Administration has forecast that Canada’s share of U.S. supply will decline sharply over the short- and long-term period as domestic production grows, with unconventional production meeting most growth in demand, offsetting a drop in conventional production and imports.

—Gary Park






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