If there's one defining characteristic of natural gas that will shape the future of the Canadian natural gas industry, it is its abundance in North America.
Supplies in Canada alone are expected to last at least 100 years at current levels of demand.
This abundance is both an opportunity and a challenge. It is an opportunity because the abundance of natural gas has made it an even more affordable energy source for the longer term.
It is a challenge because the North American low-price environment is making it increasingly difficult for Canadian producers to compete in traditional markets in North America, both in eastern Canada and in the U.S.
As we learned during the Natural Gas Dialogues, held in 2012 in eight communities across the country, Canadians recognize the challenges and opportunities faced by Canada's natural gas industry. The purpose of these Dialogues, organized by the Canadian Natural Gas Initiative, the umbrella name for the associations representing the full value chain of Canada's natural gas industry, was to gain a better understanding of the challenges and opportunities surrounding the Canadian natural gas industry.
We invited participants from diverse backgrounds, including labour, academic, environmental groups and aboriginals, to listen to their views of a resource that's an increasingly visible and important part of Canada's energy mix. We summarized what we learned, along with industry's response, in a comprehensive report released this month.
Perspectives varied across the country, but a common theme was what this new abundance of natural gas means to the industry and to the country as a whole.
From a consumer's perspective, the natural gas opportunity stems primarily from the affordability of natural gas.
Canadian consumers directly saved about $1.9 billion on their natural gas bills in 2011 when measured at 2010 prices, according to a 2012 study by Informetrica Ltd.
Accounted for in nominal terms, annual savings would grow to $4.8 billion by 2035, depending on prices, according to this study.
The abundance of natural gas in North America will help ensure that natural gas remains an affordable, secure and reliable source of energy in the foreseeable future. Canadian businesses and industries also benefit from competitively priced natural gas, enabling improved productivity and competitiveness in these industries.
As a direct result of both improved affordability and technological innovation, opportunities exist to increase domestic use of natural gas. These opportunities include greater natural gas use in power generation, as a transportation fuel for vehicles and in the marine sector, and in communities and industries in Canada's northern communities.
This is enhanced by the fact that natural gas offers significant environmental benefits over fuels currently used in these applications.
The largest near-term market growth opportunity for the Canadian industry is liquefied natural gas (LNG) exports to Asian markets, where demand for the fuel is increasing at a rapid pace. Exports to the United States, Canada's only natural gas customer, have dropped 16 per cent over the past five years and are projected to drop further because of abundant and affordable domestic supply in the U.S.
Without access to offshore markets in countries such as Japan, China and South Korea, government revenues and economic benefits related to growth in Canadian natural gas production are at significant risk.
The Conference Board of Canada, in a study released in December 2012, concluded that Canada's natural gas industry (upstream, midstream and downstream) will contribute $940 billion to the national economy through infrastructure investment and production between now and 2035.
The report makes it clear that the natural gas industry contributes to Canada's economy as a whole and to each province.
This is a tremendous economic opportunity for Canada, and it will also deliver environmental benefits. To realize this opportunity, we must ensure that Canada has a competitive fiscal and regulatory framework, we must apply technology and innovation to broaden natural gas use in Canada, and we must seize the opportunity represented by exports of LNG to Asia from Canada's West Coast.
The full report can be viewed at www.canadiannaturalgas.ca/media-library/naturalgasdialogues.
It is our hope the responses outlined in this report provide a foundation for further discussion and additional impetus to advance solutions in the interest of all Canadians.