According to a new report from BENTEK Energy, LLC, Canadian producers face serious challenges as the continued growth of unconventional natural gas supplies and newly added pipeline infrastructure in the U.S. push Canadian imports out of the U.S. market. The Big Squeeze: Ruby, Canada and Marcellus examines the broad displacement of Canadian imports and its impact on the North American natural gas market, which will ultimately lead to curtailments in Canadian production.
"Marcellus shale volumes are now pushing Canadian imports out of the Northeast, and this trend will accelerate as new pipeline expansions drive additional U.S. gas supplies into Ontario," said BENTEK Managing Director E. Russell (Rusty) Braziel. "In the West, the new Ruby and Bison pipelines will increase deliverability of the more economical Rockies gas to Western markets and the Midwest, respectively, while displacing gas back into Canada. Because of this, we anticipate gas imports to the U.S. to drop 2.0 billion cubic feet per day (Bcf/d) or 30% by 2015."
According to BENTEK, in the next few weeks Western Canadian supply currently bound for the Midwest markets on Northern Border Pipeline will face direct competition from Rockies supplies flowing east on the newly installed Bison Pipeline. By next summer, Rockies producers will have an additional 1.5 Bcf/d of westbound capacity on El Paso's Ruby Pipeline bound for Malin, Oregon. These supplies will compete head-to-head with Canadian supply for PG&E's Citygate, the premium market in the West.
"We are looking for a 1.0 Bcf/d decline in Canadian production from 2010 to 2015, despite the growth of Canadian unconventional shale production in the Montney and Horn River plays of British Columbia," continued Braziel. "The bright spot on the Canadian supply/demand horizon is a significant increase in Canadian natural gas demand, which will partially help offset the otherwise bearish outlook for Canadian gas prices."
BENTEK forecasts an increase in gas usage due to the renewed focus on oil sands development in Alberta and increased power generation in Ontario as coal-fired power plants are replaced with natural gas power generation.
The report examines these issues in detail, including a five-year outlook of the expected market changes throughout North America. It includes an in-depth look at the Canadian import outlook through 2015, including the impact of the Ruby and Bison pipelines and the supply increases expected from the Marcellus shale.
BENTEK Energy, LLC, is an energy markets information company. Based in Evergreen, Colorado, BENTEK brings customers analytical tools and competitive intelligence to make time-critical, bottom-line decisions in today's natural gas and power markets.