Liquid byproducts stand out as a growth item in an otherwise flat outlook for Canadian natural gas, according to two new industry reviews.

The Canadian Energy Research Institute (CERI) predicted 12% growth in natural gas liquids (NGL) output during the 2020s to 1.06 million b/d from 946,000 b/d.

The National Energy Board (NEB), in a longer range forecast, projected Canadian NGL production of 1.7 million b/d as of 2040, a 75% increase from current performance.

Both agencies expect liquids output to rise even while natural gas, depressed by supply gluts and poor prices, remains flat or decays over the next few years.

Canadian drilling increasingly is targeting liquids-rich sweet spots in the Montney and Duvernay formations that straddle Alberta and British Columbia (BC), CERI and the NEB noted.

The pattern is well established, said CERI. “NGLs supply significantly outpaced marketable natural gas in growth from 2012-2017 -- 51% for NGLs versus 12% for marketable natural gas.”

Strong demand and prices for liquid byproducts are expected to continue offsetting natural gas woes, which CERI and the NEB blame on North America-wide abundance owed to shale and tight gas development with horizontal drilling and hydraulic fracturing.

In Canada, liquids demand has a domestic industrial driver, the Alberta oilsands, said the research and regulatory agencies.

NGLs support a growing share of oilsands output that is marketed as molasses-like bitumen, which requires thinner to flow in pipelines and railway tank cars. Up to 30% of Canadian low grade crude cargo volumes are high value gas byproducts.

Condensate, also known as natural gasoline, is the prime bitumen thinner. The role makes condensate the growth champion within the gas byproducts family that also includes propane, butane, ethane and other light fuels and chemicals.

“Of all the NGLs, condensate production grows the most over the projection period, increasing by 205% from 226,000 b/d in 2017 to 689,000 b/d in 2040,” NEB said.

CERI added that Canadian gas liquids producers stand to gain from anticipated growth in Asian demand for “clean” fuels and raw materials for petrochemical manufacturing.

“Canada could play an important role in the global NGLs trade,” said CERI. “The primary source of NGL imports to Asia is the Middle East. However, producers in the Middle East are constructing downstream infrastructure to convert their NGLs into high valued products.”

Canadian industry is poised to break into the global NGL trade early next year, with completion of a propane export terminal that AltaGas Ltd. is building on the northern Pacific coast of BC at Prince Rupert for C$450-500 million ($360-400 million). Pembina Pipeline Corp. is advancing a similar project.