OTTAWA, Aug. 9 /CNW Telbec/ - Despite declining production, steady
increases in natural gas prices beginning in 2007 will allow Canada's gas
industry to post solid profit growth during the next four years, according to
the Conference Board's Canadian Industrial Outlook: Canada's Gas Extraction
"The industry's profitability will be helped by continued price increases
that more than offset production declines," said Louis Thériault, Director,
Canadian Industrial Outlook Service. "Profits are expected to grow annually by
more than 10 per cent on average over the next four years, due almost entirely
to increasing North American demand that will push prices upward."
With easily-accessible wells becoming increasingly depleted, companies
are being pushed to extract gas from more marginal-quality wells. As a result,
natural gas production in Canada will begin to fall this year and will
continue to decline through 2011. Alberta's share of national production will
fall over this period, while British Columbia's will increase.
In 2006, with costs continuing to accelerate and prices tumbling,
industry profits declined to $9.8 billion. This year's rebound in prices will
boost profits to almost $10.8 billion in 2007. Declining production will also
trim industry employment levels in 2007; therefore, overall labour costs are
expected to fall for the first time in eight years. Growth in costs is
expected to further moderate in 2008 and 2009, before rising again in 2010.
But with price growth surpassing cost increases in 2010 and 2011, profits are
forecast to exceed $15 billion by 2011.
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