OTTAWA, Sept. 20, 2011 /CNW/ - Canadian natural gas production is
projected to fall over the next five years, driven primarily by
continuing declines in Alberta, according to The Conference Board of
Canada's Summer 2011 outlook for the natural gas extraction industry.
Even though drilling activity in Alberta is projected to rise moderately
over the next five years, it will not be enough to offset the declines
expected from existing gas connections in the province. As a result,
Alberta's production is forecast to fall by up to 20 per cent between
2010 and 2015.
Large increases in British Columbia - largely due to shale gas
production - and a new offshore site in Nova Scotia will help slow the
decline in Canadian production. Other than in British Columbia, shale
gas remains in the early stages of development across Canada.
Overall, Canadian production has fallen from 25 per cent of the North
American total 5 years ago to less than 20 per cent at present.
"The natural gas extraction industry continues to undergo a period of
transition. Production is projected to fall indefinitely, and barring
any unexpected situation that would cause prices to spike, profits are
unlikely to return to pre-recession levels until beyond the medium
term," said Todd Crawford, Economist.
The natural gas industry adapted quickly to the difficult circumstances
of the past two years to maintain profitability. Pre-tax profits in the
industry totaled $616 million last year—compared to more than $8
billion in 2005. Even though prices remain weak for the third
consecutive year, profits will rise to $744 million this year.
The economic recovery is expected to take firmer hold next year and
growth in U.S. gas production is forecast to slow. As a result, prices
are expected to see some moderate improvement through 2015, which will
be the main source of revenue growth. However, costs are likely to
re-emerge as a key issue for the industry - especially in Alberta,
where it is in competition with the oil industry - and they will eat up
a substantial portion of higher revenues.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448