Canada Natural Gas Market Intelligence

Industry Outlook & Drivers

Regional Market Outlook on Natural Gas

• Natural gas production is expected to grow at about 2.04 percent CAGR, from 2018 to 2020, as a result of the decrease in demand from the neighbouring country, the US
• The production of conventional natural gas has been declining, whereas, there has been an increasing trend in the production of natural gas from unconventional methods, which are technologically challenging
• In accordance of Canadian Crude Oil and Natural Gas Production, Supply Costs, Economic Impacts, and Emissions Outlook (2018-2038), Canada's current conceivable potential is 5 Bcf/d
• Canada is planning to increase the overall electricity generation capacity due to the reason that the country is focusing on usage of cleaner energy sources and also to increase the usage of electric car

Natural Gas Supply and Demand 

• Canada gas business has been heavily integrated with the energy demand in the US. Traditionally, Canada exports its surplus to only one market, i.e., the US, and imports a smaller amount from the US into Central Canada
• Local demand for natural gas is expected to grow by about 2.07 percent CAGR, from 2018 to 2020
• Canada is focusing on the usage of natural gas that is why the demand of natural gas in generating electricity is increasing in the country
• Canada is investing a lot on developing the electricity infrastructure even better in order to increase ease the path of adopting electric vehicles more during the upcoming few years

Consumption Profile

• The industrial sector has the highest share of 53 percent in the consumption share in 2017, followed by the transportation sector with 22 percent
• The industrial sector is expected to grow at a higher rate, compared to the rest of the end-users, whose consumption will mostly be stagnant
• With the decrease in natural gas demand from the US, the producers in Canada are proposing to export natural gas by liquefying it to newer markets, such as Asia Pacific
• Canada is continuously working towards maintaining a better pipeline structure for natural gas supply in order ensure that the increasing demand of natural gas can be easily met

Canada Natural Gas Price Trend and Forecast

Historical Price

• The average industrial natural gas price in 2018 decreased by 23.73 percent Y-o-Y, compared to 2017, and reached C$ 1.67/MMBtu
• The major reasons for drop in the prices of natural gas was Canada's efforts to increase the overall domestic production of natural gas

Price Forecast

• The prices of natural gas in Canada are expected to face fluctuations during the first half of 2019 as the country is witnessing huge demand of natural gas because of winter season
• The prices are expected to increase in Q1 2019, compared to Q4 2018, due to heavy dependence of end-users on natural gas and high heating demand

Canada Natural Gas Trading Practices

• Natural gas trading can be categorized as physical trading and financial trading. Physical trading involves buying and selling of the physical commodities, whereas in financial trading, there is no physical delivery of natural gas
• Financial trading involves financial instruments, which are used to provide hedge against the risk of price movement
• Natural gas can be traded either on a short-term basis, via spot market trades or using long-term bilateral contracts