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Natural gas output set to decline for next five years

John Morrissy; The Ottawa Citizen
September 21, 2011

OTTAWA — Canada is losing ground as a major player in North American natural-gas production, the Conference Board of Canada said in a report Tuesday.

The report forecasts that production is expected to ratchet down over the next five years, led by declines in Alberta output, which is expected to slide by 20%.

As a result, industry profits, which totalled more than $8-billion in 2005, will ring in at $744-million in 2011 and not return to pre-recession levels until beyond the medium term, said economist Todd Crawford.

Drilling activity is expected to be weak for a third consecutive year as explorers shift from natural gas plays to oil plays, where more favourable pricing persists.
And in the near term, natural gas prices will remain depressed — not rising above US$6 per thousand cubic feet before 2015 — as U.S. onshore production increases again this year and demand growth is constrained by the struggling American economy.

As a result, Canada’s place as a global natural gas giant continues to be challenged, as rising output in B.C. and offshore Nova Scotia fails to offset Alberta’s declines, Crawford said.

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