BUSINESS

Canada needs LNG export options to avoid decline in natural gas production: CAPP

07/15/2015 01:29 EDT | Updated 07/15/2016 05:59 EDT
CALGARY - Canada's natural gas production will decline by about 10 per cent from current levels unless new export routes to Asia are opened, says a report released Wednesday by the Canadian Association of Petroleum Producers.

The oil and gas industry group says Canada needs options for exporting liquefied natural gas by ship if the country is to avoid a decline in production over the coming years.

Greg Stringham, the association's vice-president of markets and oilsands, said Canada needs to find new markets for its gas because the traditional markets of Central Canada, the U.S. Midwest and U.S. Northeast are being supplied by new, abundant sources of shale gas.

He said Canada needs to act fast to build export capacity because countries like Australia and the United States are also rushing to build capacity to supply global markets.

"There's this window for Canada to be able to step into, but it is a fiercely competitive window," said Stringham. "It's barely open, and the lucky part is we have several projects that are advancing. For somebody starting brand new, that window is almost closed."

The report estimates that projects being developed on Canada's West Coast could add about 3.5 billion cubic feet per day of production and help turn around Canada's declining production.

If those LNG export routes open up, CAPP says Canadian production could recover to current levels of 14.5 billion cubic feet per day by the end of the decade and then climb to 17 billion cubic feet per day by 2030.

But if no export routes are opened, CAPP's latest outlook estimates natural gas production would decline by about 1.5 billion cubic feet per day over the next 10 years to a low of 13 billion cubic feet per day, and then remain flat until the end of the report's forecast period in 2030.

Stringham said provincial and federal governments have been timely in their political and regulatory decisions to encourage natural gas exports, but they need to maintain that commitment.

"They have been doing it, we just need to know that in this window over the next five years that needs to continue," said Stringham.

"Probably the last key elements for some of these projects is just getting a final approval from the Canadian government on their Canadian environmental impact assessment."