Canadian Exports to U.S. Seen Holding Steady Through 2015
Canadian natural gas exports to the United States will hold steady through 2015 in their current range above 3 Tcf per year, an annual state-of-the-industry survey by Ottawa's energy department predicts.
The outlook, by the gas division of Natural Resources Canada, anticipates that rising domestic demand rather than deteriorating supplies will be the cause when pipeline deliveries to the U.S. eventually turn down.
The projections call for annual Canadian exports of 3.2 Tcf this year, unchanged from 2004, an increase to 3.5 Tcf in 2010, a gentle drop back to 3.2 Tcf by 2015, then a sharper drop to 2.7 Tcf in 2020. The 2010 peak reflects official expectations that the C$7 billion (US$5.6 billion) Mackenzie Gas Project will be built on schedule and start deliveries of 1-1.8 Bcf/d in 2009.
Annual domestic gas consumption in Canada is projected to top 3 Tcf for the first time this year, then reach 3.4 Tcf in 2010, 3.8 Tcf in 2015 and 4.1 Tcf in 2020. Key factors in the projected demand growth include expansion of Alberta oilsands production, a heavy user of gas for heat processes and power generation.
While the productivity of conventional gas fields in the western provinces is still expected to peak and start decaying eventually, tight markets and strong prices are forecast to generate growth in unconventional supplies led by coalbed methane. Gas extraction from vast coal seams that carpet much of Alberta, while still too new to project reliably, is held likely to multiply at least 20-fold into the range of 2 Bcf/d by 2015.
That is an average of current industry and government forecasts, which advocates of the new source hold to be conservative because it is still based on historical data generated before recent improvements in technology and knowledge of easily-tapped dry spots in the coal deposits.
The Canadian coalbed methane potential is colossal, the federal survey observes. Natural Resources Canada points to a range of reserves projections that peg the national endowment of coal gas that could be produced with currently conceivable technology at 187 Tcf to 586 Tcf. As in the case of coalbed methane, the federal outlook makes no attempt to guess the future of production on Canada's Atlantic seaboard. The Sable Offshore Energy Project is forecast to continue delivering at current rates, but uncertainty prevails over future drilling results off Nova Scotia and prospects for development on the Grand Banks of Newfoundland.
Canada also is expected to contribute to increasing imports of LNG into North America, although just how much remains unknown with any degree of certainty. At last count, eight LNG projects were in various planning stages at Canadian tidewater locations with potential to send out 4.4 Bcf/d and with ready access to pipelines into the U.S.
The Canadian LNG project lineup includes Anadarko Petroleum's 1 Bcf/d Bear Head and the 500 MMcf/d Statia Terminals and a Keltic Petrochemicals proposal with no disclosed capacity yet, all in Nova Scotia; Irving Oil's 1 Bcf/d LNG addition to its refinery site now entering the construction stage at Saint John in New Brunswick; 610 MMcf/d Galveston LNG and 300 MMcf/d WestPac Terminals at the northern British Columbia ports of Kitimat and Prince Rupert; and the 500 MMcf/d Rabaska terminal proposed by a consortium led by Gaz Metropolitain and the identically-sized Gros Cacouna project being mounted by TransCanada PipeLines and Petro-Canada along the St. Lawrence River in Quebec.
Apart from the Irving project, which is the oldest one in the lineup and has set an early-2005 date for construction to begin, the Canadian LNG proposals are still working their way through the planning and regulatory process. Natural Resources Canada makes no attempt to guess which projects will be built, but points to a 2003 long-range supply forecast by the National Energy Board that anticipated Canadian LNG imports of 1.2 Bcf/d by 2025.
The one sure bet in the Canadian outlook is that the mix of supply sources is poised for change. "Canada's conventional supplies were the 'engine of growth' for the North American natural gas market in the 1990s," Natural Resources Canada recalls. "However, the conventional reservoirs and producing areas of the Western Canadian Sedimentary Basin are maturing and now require very high drilling rates simply to maintain current levels of production."