Western Canadian natural gas suppliers expect to keep on losing sales to rival U.S. merchants in Ontario, Quebec and the northeastern United States.

The delivered cost of gas from Alberta and British Columbia (BC) in eastern markets exceeds Pennsylvania and Ohio Marcellus shale output by 17-34%, according to data circulated by the Canadian Association of Petroleum Producers (CAPP).

As of mid-2015, supplies collected by TransCanada Corp.’s Alberta and BC grid, Nova Gas Transmission Ltd., and shipped via its national Mainline to the nation’s biggest distributor, Enbridge Gas in eastern Ontario, was C$6.19/gigajoule (GJ) (US$4.87/MMBtu).

Competing Marcellus gas, currently entering the region via the Dawn storage and trading hub in southwestern Ontario, cost C$4.62/GJ (US$3.64/MMBtu). U.S. shale supplies forecast to start arriving within two years via the Rover and Nexus pipeline projects are projected to cost C$5.04-5.27/GJ (US$3.97-4.15/MMBtu).

CAPP compiled the scorecard from an Enbridge outlook report to the Ontario Energy Board. The trade association presented the comparison to an Alberta government royalty review panel. It was a warning against expecting a revival of provincial gas revenues any time soon.

On the eastern side of North America CAPP said, “It is clear that transporting western Canadian gas via the TCPL [TransCanada Pipeline] Mainline is by far the least competitive option for serving this market.

“The competitive disadvantage of western Canadian gas as a result of its relative geographical remoteness [more than 2,000 miles away from eastern markets] is being keenly felt today. Growing U.S. shale gas production has displaced Canadian gas from the U.S. markets it traditionally served in the Northeast and Midwest.”

The rivalry will expand as the U.S. shale revolution generates new pipelines, predicted the trade association. “U.S. natural gas production growth has shown little sign of abating and the competition faced by producers operating in Alberta likely will only increase as pipeline developments allow Marcellus gas to serve continental markets located further west.”

In combination with accelerating migration of western Canadian supply development into rich shale regions of northern BC, the trade trend has been especially hard on Alberta as a national and international mainstay since the birth of the modern industry in the 1950s.

“As exports to the U.S. have declined, western Canadian natural gas production, particularly Alberta production, has declined in lockstep with this loss of export market. Alberta marketable gas production declined from 13 Bcf/d in 2007 to 10 Bcf/d in 2014, representing a decline of 23%,” CAPP said.

A revised Alberta government budget, presented this week by the New Democratic Party regime that wrested power away from the Conservatives in the May election, acknowledged the dethronement of gas as the former top provincial revenue source.

Since peaking in the fiscal year of April 2005 through March 2006 at C$8.3 billion (US$6.2 billion), gas royalties have shriveled by 95% to C$343 million (US$257 million) forecast for 2015-2016. The new budget predicts the current fiscal year average for the Alberta Reference Price, a monthly weighted calculation of sales to all markets done for royalty purposes, will be C$2.60/GJ (US$2.05/MMBtu) — down by C$0.90/GJ (US$0.71/MMBtu) or 26% from C$3.50/GJ (US$2.76/MMBtu) last fiscal year.

The only demand growth in sight for Alberta gas is slow but steady increases by northern thermal oilsands extraction projects, which continue to raise production as work continues on most new plants or expansions begun before the 2014-2015 energy commodity price drop.

The new provincial budget predicts gas will take until fiscal 2017-2018 to make even a partial comeback, with the Alberta Reference Price improving to C$3.20/GJ (US$2.55/GJ).