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Barely a dozen years ago, Alberta was producing so much natural gas the resource was the mainstay of the provincial economy and a big reason Canada was the second-largest natural gas exporter on the planet.
Today, Alberta gas is dirt cheap and is struggling to find a home, pushed to the sidelines by shale gas discoveries in the United States and competition from British Columbia. Even emerging opportunities to export gas in liquid form from the West Coast could elude Alberta gas for years, as projects first draw from gas resources in British Columbia’s immense shale plays.
“There are no easy answers for the Alberta gas producers,” Peter Howard, president and CEO of the Calgary-based Canadian Energy Research Institute, said in an interview. “The next several years are going to be challenging.”
While the oil sands, heavy oil and shale oil have moved to the forefront of Alberta’s resource economy, the question of what to do with Alberta’s estimated 3,400 trillion cubic feet of natural gas resource has prompted provincial politicians to look for new uses, such as increasing demand in the province and promoting access to LNG terminals on the West Coast.
The slump has cut into provincial revenue. Gas royalties have declined to estimated $965-million this fiscal year, from a high of $6-billion in 2006-2007.
During that heyday, close to 16,000 gas wells were drilled in the province, Mr. Howard said last week to the all-party committee on resource stewardship. In 2012, that dropped 1,187, and it’s unlikely that the number of gas wells will break the 1,000 mark this year.
“We need to identify ways to increase gas demand – through value-added opportunities and use inside the province plus export,” said Conservative MLA for Calgary-Varsity Donna Kennedy Glans, chair of the committee.
Mike Ekelund, assistant deputy minister at Alberta Energy, took the message to an LNG conference in Calgary on Tuesday.
For the rest of this column, click here: http://business.financialpost.com/2013/09/17/once-an-economic-mainstay-albertas-natural-gas-now-struggling-to-find-markets/?__lsa=36b1-fda2