08/01/2012 10:17 EDT | Updated 10/01/2012 05:12 EDT

1 out of 5 natural gas drilling projects stalled near Fort Nelson, B.C.

A national trade association revised an earlier forecast and now says that natural gas drilling activity in B.C.'s northeast will likely be 22 per cent lower this year than originally predicted.

Fort Nelson sits on one of the largest natural gas reserves in the world, but Petroleum Services Association of Canada President Mark Salkeld said that only 485 wells will be drilled in B.C. instead of rougly 620 that were expected, mainly due to declining commodity prices.

"It's been a steady decline since our initial forecast for 2012 with a little over 15,000 wells [for all of Canada]," he said.

"We've been revising down every quarter simply because we've been following the trend with regards to dry natural gas prices, which have been steadily declining to lows we haven't seen in a long time."

Jeremy Cote, president of the Fort Nelson Chamber of Commerce, said the slowdown is already having ripple effects on the economy in Fort Nelson.

"Low natural gas prices have caused a lot of things to tail off and it's kind of a cascading effect. When there's not as much work out in the bush then there's not as many companies locally that need as much work done, and then it kind of spirals from there," Cote said.

He also said the situation has caught most people in the community by surprise.

"If you talked to folks before the prices started to really go down, there really wouldn't have been a lot of people that said, 'Oh yeah, gas prices are going to go down. We're going to be down to two dollars a gigajoule, or roughly somewhere in there,'" he said.

Salkeld said nothing on the economic horizon suggests that natural gas prices will increase anytime soon. He says what's needed is new markets for exporting the resource, particularly in Asia.

"It's just going to hold fast until we develop more opportunities for sales and marketing overseas," Salkeld said.

Prices should increase once B.C. is able to export liquified natural gas to Asia, he said.

But those liquified natural gas projects are still several years away from being up and running.