Natural Gas Investment will continue to enrich Albertans

OTTAWA, Dec. 17, 2012 /CNW/ - New investment in natural gas in the next quarter-century will bring more economic benefits to Alberta than to any other province, according to a Conference Board of Canada report issued today.

Natural gas industry investments are projected to total $386 billion (in 2012 dollars) from 2012 to 2035, most of which will take place in the three westernmost provinces - British Columbia ($181 billion), Alberta ($154 billion), and Saskatchewan ($14 billion).

Although more investment will be made in British Columbia, Alberta will gain the most in gross domestic product from the investment - an increase of $153.6 billion (in 2012 dollars) from 2012 to 2035. Because of tight labour markets in the province, natural gas investment will draw interprovincial migrants - which will help fuel demand for other housing and other goods and services. In addition, less of the investment in Alberta will be machinery and equipment, so it will require a lower level of imports than the investments made in British Columbia.

Almost 76 per cent of the overall investments made will be in the upstream industry segment. The upstream segment includes exploration, production, gathering systems, and liquids extraction facilities.

Alberta's conventional production is in long-term decline, but natural gas will continue to be good to the province's economy over the next 25 years.

"The future of Canada's natural gas industry depends critically on these upstream investments being made. Conventional natural gas in Alberta has been the mainstay of the industry for decades, but is now in decline. A fiscal system that is stable, attractive, and continues to support the viability of the industry is critical," said Len Coad, Director, Energy, Environment and Technology Policy.

Although the province's conventional gas production is expected to decline over the next 24 years, Alberta is expected to continue as Canada's largest natural gas producer. Bitumen production and power generation will absorb an increasing share of Alberta's natural gas supplies.

Provincial direct and indirect taxes will also increase in every province, but Alberta will garner the greatest increase in provincial income tax collection ($7 billion) and corporate taxes ($6.5 billion) over the 24-year period. The tax revenues cited do not include natural gas royalty payments, which represent the resource owners' share of the value of production.

Even though natural gas production is not expected to increase significantly nation-wide over the next 24 years, overall production is still expected to contribute a cumulative $576 billion (2012 dollars) to Canada's economy, supporting 129,000 jobs per year. The $386 billion in investment spending will generate approximately 130,000 jobs annually.

Overall, therefore, Canada's natural gas industry will generate roughly $940 billion in real GDP over the next 24 years and support 6.2 million person-years of employment. (an average of nearly 260,000 jobs annually).

The report, The Role of Natural Gas in Powering Canada's Economy, was funded by the Canadian Natural Gas Initiative. The publication is publicly available at the Conference Board's e-library.

Link to publication: http://www.conferenceboard.ca/e-library/abstract.aspx?did=5251

SOURCE: Conference Board of Canada

Brent Dowdall, Media Relations, Tel.: [phone] ext.  448
E-mail: [email protected]