With North American natural gas production predicted to continue at a “steady pace,” Canada’s summer gas prices should average in the range of US$4.00/MMBtu to $5.00/MMBtu, the National Energy Board (NEB) said Thursday.

The abundant gas supplies are seen as “easily satisfying a slight increase in North American natural gas demand” this summer from the industrial sector, the federal regulator said in its 2011 Summer Energy Outlook. Crude oil prices are expected to average US$100-120/bbl, but oil and gas supplies are expected to be “adequate” to meet demand.

“We’ve seen a record amount of horizontal wells drilled recently in North America’s major shale gas formations,” said NEB CEO Gaetan Caron. “This is why we are expecting stable natural gas production levels for 2011.”

A steady supply of gas also has reduced U.S. imports of Canadian gas and liquefied natural gas (LNG), Caron noted.

“We are also seeing some shipments of LNG from overseas that may have been destined to North America now being directed to Japan for use in power generation due to outages at the nuclear facilities. On the demand side, industrial gas use is expected to increase in the steel, chemical and power generation sectors as the economy continues to recover.”

Electricity rates “will vary from province to province as multiple jurisdictions are planning to increase electricity rates,” the NEB said. Nova Scotia’s rates rose 6% earlier this year; BC Hydro’s have increased by 8%, and Ontario’s time-of-use and tiered rates are up by 4% and 6% respectively, NEB said.

Canada’s two wholesale electricity markets in Alberta and Ontario issued different outlooks for the summer. Ontario is predicted to have lower prices because of a cooler summer, while Alberta is “likely” to see higher prices with demand up 5% compared with 2010. Alberta electricity supplies were reduced after three coal-fired generation units were shut down in 2010.

According to the NEB, the move to renewable energy is becoming a trend in Canada. This year wind resources “are increasing faster than any other generation type.” More than 1,000 MW of wind resources expected to be added this year, “which would bring national wind capacity close to the 5,000 MW mark by the end of 2011,” the regulator said.

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