Natural gas output in the Western Canadian Sedimentary Basin, which reached a record 16 Bcf/d this winter, will decrease over the short term and plateau at 14 Bcf/d by 2020, an analyst said Monday.
Production in the WCSB has been on the decline in the past few years, due to increasing output from the shale plays in the US' Northeast, which has pushed back Canadian gas from its traditional market in the US. However, there will still be a demand for WCSB gas from oil sands producers in Alberta, Dulles Wang, a principal analyst for North America gas with Wood Mackenzie, said at the CERI 2016 Oil & Gas Symposium.
By 2020, about 700,000 b/d of new oil sands production capacity is projected to be added in Western Canada that could potentially need 1.5 Bcf/d of gas, Peter Howard, president emeritus of the Canadian Energy Research Institute, said on the sidelines of the event.
Nearly 80% of Alberta's oil sands producers will be utilizing the SAGD, or the steam-assisted gravity drainage technology, to extract bitumen that will result in increased demand for natural gas, compared with the mining process, Howard said.
Demand for WCSB will also grow if final investment decisions are taken for LNG projects planned in British Columbia along the Canadian Pacific Coast, Dulles said.
An FID is due by the Petronas-led Pacific Northwest LNG for its 12 million mt/year LNG facility, once the Canadian Environmental Assessment Agency issues its permit later this month.
"If we get LNG online, it will be a different story for the WCSB," Dulles said without elaborating. "For Western Canada, the story will be about Asia. There is overcapacity in [LNG demand in] China as it moves from an industrial to a service-based economy."
Beyond 2020, demand for WCSB will likely grow, driven by Alberta government's decision to phase out its coal-fired power plants by 2030.
"Some of the new generation capacity will be renewables and we are waiting to see what the final outcome will be," Dulles said.
