CALGARY – The Conference Board of Canada says natural gas producers are in for more losses as they face flat North American demand and increased U.S. competition.
In its five-year outlook, the Conference Board says Canadian production will decline as the U.S. becomes more self-sufficient thanks to an abundance of shale gas projects.
Years of supply increases to the south, coupled with a warm winter, led to the lowest prices since the late 1990s last year and pre-tax losses of $7.6 billion for Canada’s gas producers.
The Conference Board says rising prices, boosted in part by the growth of U.S. natural gas exports through pipelines and liquefied natural gas, could trim the losses of Canadian producers to an estimated $2.8 billion this year before returning to profits in 2019.
Canadian demand for natural gas is expected to increase in the coming years thanks to the oilsands and power plants, but a shift in the U.S. towards renewables and back to cheaper coal means overall North American demand is expected to be flat.
The Conference Board says the rise of U.S. LNG exports could mean increased demand for Canadian gas in the future, while the report assumed no major Canadian LNG projects would be in service by 2021.