Gas exports end 17-year growth streak

Gary Park

Petroleum News Calgary correspondent

Canadian natural gas shipments to the United States fell by 7.9 percent last year, the first year-over-year decline since 1986, but not something that would cause lost sleep among producers.

While exports shrank to 3.48 trillion cubic feet from 3.78 tcf in 2002, revenues made a staggering surge to C$25.3 billion (US$19. billion) from C$18.3 billion (US$13.7 billion) as the average price rose to C$6.72 per gigajoule from C$4.47 and beating the previous record of C$6.15 in 2001. The National Energy Board, in releasing the numbers, said the drop in exports stemmed partly from lower Canadian production, higher Canadian end-use demand, storage build-up in 2003, lower demand in some export markets, and higher imports of liquefied natural gas to the United States.

Natural Resources Canada has forecast a slight rebound this year to 3.53 tcf and 3.54 tcf in 2005, peaking at 3.7 tcf in 2010, then falling again to 3.56 tcf in 2015.

But export revenues are expected to remain strong at C$17.8 billion (US$13.3 billion) in 2005, C$20.3 billion (US$15.2 billion) in 2010 and C$21.8 billion (US$16.4 billion) in 2015. The U.S. Energy Information Administration has projected Canadian imports will remain at about 3.6 tcf through 2010, then start sliding to 2.6 tcf in 2025, based on data and projections from various sources.

The Alberta government has echoed those trends, forecasting a 17 percent decline in the province over the next three years to 4.6 tcf in 2006-07.

The bulk of last year’s volume declines occurred in the California market, which was off 21 percent to 433 billion cubic feet and the Pacific Northwest, which dropped 17 percent to 401 bcf. The U.S. Midwest slipped by 1 percent to 1.59 tcf and the Northeast was down by 6 percent at 1.08 tcf. California sales fetched C$6.48 per gigajoule, up 64 percent from 2002; the Midwest rose 52 percent to C$6.70; the Pacific Northwest grew by 47 percent to C$5.92; and the Northeast was up 42 percent at C$7.09.

Editor’s note: a gigajoule is a Canadian unit of heating value equal to approximately 95 percent of a million British thermal units.