Only a breakthrough into global trade in liquefied natural gas (LNG) can pull Canadian supply development out of the doldrums, a senior economics agency in the industry capital of Calgary said.

The Canadian Energy Research Institute (CERI), in an annual supply cost review, gives producers no chance of recovering market shares lost in the United States, Ontario and Quebec to "staggering" output of cheaper U.S. shale gas.

But as in previous reports, CERI still holds out hope for an LNG victory by predicting that new tanker terminals on the Pacific Coast of British Columbia will achieve exports of 5 Bcf/d starting with completion of the first project in 2022.

Like other agencies closely watching the LNG scene, including the National Energy Board (NEB), CERI makes no attempt to predict which of 20 proposals for BC terminals and allied pipelines to tap northern shale supplies for exports will succeed.

The most advanced entry -- Asian contender Pacific NorthWest LNG, led by Malaysian state conglomerate Petronas through Calgary subsidiary Progress Energy -- is poised to learn whether it has passed a key regulatory test within two weeks.

The Canadian Environmental Assessment Agency (CEAA) is scheduled to render a verdict on the project’s proposals for a terminal capable of loading vessels with up to 2.7 Bcf/d on the northern Pacific Coast at Prince Rupert.

Aboriginal and eco-opponents of fossil fuel development put up a long fight against Pacific NorthWest LNG, especially on grounds that heavy construction and tanker traffic would threaten northern salmon.

Any CEAA approval is expected to include a host of conditions. Petronas-Progress has postponed investment decisions to allow time for reviewing the ruling and its effects on project costs. NEB has granted an extension, until mid-2017, to a construction permit for an associated pipeline project by TransCanada Corp. (see Daily GPI, Sept. 16).

Apart from LNG and smaller prospects for replacing coal in Alberta power plants, CERI predicts that across Canada, "the next 20 years will be characterized by slow growth at best for both oil and natural gas."

Western Canadian supplies are rated as too expensive to tap and too far from consumers to compete with low-cost U.S. supplies for shares of any large-scale demand increases. CERI said, "significant reductions in production costs would be needed for an expansion of oil and gas activity in Canada."

A shift of supply sources within the Canadian industry, to BC from Alberta, will continue, CERI added. Rich shale targets and results from northern adaptations of drilling and hydraulic fracturing technology drive the field activity migration.

"In the Western Canada Sedimentary Basin, the most economically viable natural gas wells are in British Columbia, particularly its Montney formation," CERI said.

"The average supply cost of vertical wells in BC’s Montney formation is C$2.59 (US$2.00/Mcf), proving its attractiveness to drillers. Since 2013, approximately 65% of the wells drilled in BC have been in its Montney formation."

Unless LNG hopes come true CERI expects Canadian gas production to hover for the next two decades in the current range of 14-15 Bcf/d, down by 12-18% from the national peak of 17 Bcf/d 10 years ago.

The outlook for Canadian "conventional" drilled oil from flowing wells is similar. CERI foresees slow but steady erosion of production from a 2014 peak of about 1.6 million b/d down to the range of 1.4 million b/d. But the report does not cover the Alberta "unconventional" oilsands, where mining and underground thermal production average 2.3 million b/d. Bitumen output is still growing as a result of projects begun before the current oil price low, technical improvements and long-range commitments by companies big enough to weather market storms.