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Stayin' Alive - Alberta's Gas Use Is Rising, But Will That Be Enough to Save Producers?

Natural gas producers in the Canadian province of Alberta have had a heck of a time in recent years. Marcellus/Utica gas production has flooded markets in eastern Canada and the U.S. Northeast and Midwest, squeezing out Alberta gas in the process. Also, Alberta gas producers’ dreams of piping gas west to the British Columbia coast for export to Asia as LNG have been thwarted. Lucky for them, though, gas demand within Alberta is on the rise, thanks to increasing use of gas in the oil sands and a decision by the province’s largest power generator to shift from coal- to gas-fired generation and renewables. Today we update gas output and consumption trends in Canada’s Energy Province.

For the first time in memory, Alberta in 2016 consumed more than half of the natural gas produced within its borders, and the same holds true today. That’s really extraordinary when you consider that the Texas-size province is Canada’s largest energy producer and is home to only 4.1 million people—two-thirds as many as metropolitan Houston. Also, Alberta gas production is off sharply; it now averages only 10.4 billion cubic feet/day (Bcf/d), compared with more than 14 Bcf/d in 2006. What’s going on here?

The challenges faced by western Canadian gas producers are years in the making, and have been a frequent topic in the RBN blogosphere. In Stuck in the Middle, we discussed Alberta’s world-class gas reserves—hundreds of trillions of cubic feet, some accessible via conventional vertical wells and much more waiting to be freed via horizontal wells and hydraulic fracturing—and the fact that Alberta accounts for about two-thirds of Canada’s total gas production. Then, in One Way Or Another, we examined the game-changing impact that rising Marcellus/Utica gas production has had in eroding Alberta gas producers’ traditional markets in Ontario, Quebec and the U.S. Midwest and Northeast, and on the dimming prospects for piping large volumes of western Canadian gas to the British Columbia coast and exporting it as LNG.

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