NEB predicts rising demand for natural gas

The National Energy Board is expecting Canada’s natural gas market to tighten over the next two years.

CALGARY — The National Energy Board is expecting Canada’s natural gas market to tighten over the next two years.

In a report Thursday, the federal energy regulator said the current downturn in Canadian natural gas drilling will put a “significant dent” in supplies between this year and 2011.

Natural gas prices have tumbled from a high of US$13 per 1,000 cubic feet in July 2008 to below US$2 per 1,000 cubic feet earlier this month, prompting many energy companies to rein in their drilling.

Prices have since rebounded somewhat, but still languish well below the levels many companies need to make their activities economically viable.

Less than half the number of rigs were working in Canada this week compared to a year go.

According to the Canadian Association of Oilwell Drilling Contractors, there were 193 rigs active the week of Sept. 15, compared to 410 at the same time of 2008.

Production from new and existing conventional natural gas wells, which represent a big portion of North American supply, is expected to decline.

But unconventional activity in tough-to-access tight gas and shale gas reservoirs is expected to continue at modest levels into next year, as the industry hones its drilling and fracturing technology.

Overall deliverability — the ability to produce gas from new and existing wells — is expected to decline by 17 per cent by 2011.

The recession has eaten away at demand from natural gas, namely from industrial users who use the commodity for electrical generation.

However, Canadian demand is expected to rise six per cent between now and 2011, with the biggest increase coming from Alberta oilsands developers.

Natural gas is used to generate power and create steam for many oilsands projects.

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