WCSB production in British Columbia (B.C.) is forecast to grow due to liquefied natural gas (LNG) demand, but WCSB production in Alberta will continue to decline amid competition from gas supplies in the United States (U.S.).
Dry natural gas production in the WCSB is expected to rise from its current level of 15.5 billion cubic feet per day (Bcf/d) to 21.7 Bcf/d in 2030, with LNG requirements accounting for 19% of production growth in 2030. The WCSB contains one of the world’s largest reserves of oil and gas and underlies 540,000 square miles of acreage in Alberta, northeast B.C., southwestern Manitoba, and southern Saskatchewan.
At a macroeconomic level, prospects for WCSB growth appear positive due to the current construction of the Shell-operated LNG Canada export facility in B.C. An analysis of Solomon’s forecast by province, however, shows WCSB production in B.C. will grow while gas production in neighbouring Alberta will continue to decline and struggle for market share.
LNG exports from B.C. on Canada’s west coast will drive WCSB gas demand and production growth. Solomon expects that the production of dry gas to meet LNG export requirements will commence in 2022, reaching 4.1 Bcf/d in 2028. Five partners are participating in the LNG Canada project, which will draw heavily on their natural gas assets in B.C.:
Figure 1 shows B.C. production will more than double over the next decade to meet increased demand requirements for LNG. This increased demand will benefit the B.C. economy through infrastructure development, increased drilling and completion activity, and larger direct government royalty revenue.
While B.C. gas production is expected to grow, Figure 2 shows Alberta natural gas production declined 0.8 Bcf/d over the last decade and is expected to fall by 0.7 Bcf/d over the coming decade. This decrease will occur as high-cost conventional production in the eastern part of the province is expected to be replaced with lower-cost production from the Montney and Duvernay plays. Completion of NOVA Gas Transmission Ltd. (NGTL) system enhancements have been underway to secure delivery of increased supplies from the western side of the province to exit-basin infrastructure at Empress, Alberta to the east. The question dangling above Western Canada production is whether the market once available at Empress will still exist.
Alberta natural gas production is dependent on three major sectors of demand: Exports into GTN (California/Pacific Northwest (PNW)), Northern Border (Chicago), and TC Mainline (Ontario, Quebec, and the northeastern US). These exports have declined from 6.9 Bcf/d in 2010 to 6.0 Bcf/d in 2019 primarily due to Bakken associated gas competing for pipeline space to service downstream markets.
These three markets have distinctive risks going forward:
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