By Mike Balsamo | 04 December 2016 09:06:25A new report by the National Energy Board (NEB) shows natural gas producers are ramping up their output to meet Canada’s 2020 greenhouse gas emissions targets, and that Canada is in a “new normal” as a carbon market for the world’s second-largest gas exporter.
While many companies are looking for ways to expand production, there is also growing interest in other sectors of the economy, including energy infrastructure, according to the NEB report released Monday.
“Canada’s energy infrastructure sector has been particularly vulnerable to changes in the oil and gas industry, which has been the largest contributor to greenhouse gas intensity and emissions,” the report says.
“These changes have been the most significant driver of greenhouse gas emission increases.”
“While the impact of the oil sector’s decline has been limited to Alberta, Alberta is one of the major contributors to the greenhouse gas increase,” it adds.
Natural gas production is the largest source of emissions to Canada, accounting for about one-third of total emissions.
The report says this has been driven by a combination of lower natural gas prices and more flexible supply chains.
It says natural gas output has also been affected by new technology, and there are “a number of reasons why some of the sector’s activities have been able to expand in recent years.”
The report says while the growth in Canadian gas production has been slower than other energy sectors, that hasn’t stopped industry from finding ways to increase output.
“While gas production growth has been more rapid in the energy sector, the growth has also slowed down for other sectors,” it says.
“This slowdown is largely due to the decline in oil prices, as well as the introduction of natural gas-fired generation, which also had a negative impact on gas prices.”
Natural gas prices in the US are also down by about 40 percent from the highs they reached in the late 2000s.
The NEB’s annual report on energy says Canada’s natural gas market is “growing more quickly than most other global economies, despite continued economic uncertainties.”
The average price of natural aces for each barrel of gas produced in the country was $1.23 per million British thermal units in June, down from $2.23 in May.
The price has been $2 to $3 per million Btu for a decade, but has declined each year.
The report also said Canada’s economy is “continuing to benefit from the growth of natural resource extraction,” but the report said it is not clear if this is the result of a natural gas boom or simply a “long-term trend.”
It adds that while natural gas production was up from the first half of 2016 to the second half of 2020, the trend is “still in the early stages of a sustained trend.”
The energy industry has seen a number of expansions in recent months.
Earlier this month, Natural Resources Minister Joe Oliver announced that Kinder Morgan will be drilling up to six wells on the north coast of British Columbia for the first time.
The announcement comes as the company prepares to start the $5.5 billion expansion of its Trans Mountain pipeline that will carry Alberta crude oil to terminals in Vancouver.
Last week, Canadian Pacific said it was expanding its oil production in Canada, with the company signing a deal with Canadian Natural Resources Limited (CNRL) to build an offshore gas project off the coast of Newfoundland.
The new pipeline will bring more than 1.2 billion cubic feet of natural-gas-fired power to the market.
The project will produce around 1,000 megawatts of electricity annually, the largest in the Atlantic market.