Outlook for the continued convergence of natural gas and electricity markets and the impact on energy consumers

This presentation discussed the implications of converging natural gas and electricity markets with reference to natural gas supply, demand and prices. Convergence is an outcome of the increasing use of natural gas in power generation. The author stated his view that convergence of natural gas and electricity will continue, and even increase. The issue of deliverability versus reserves in North America was discussed. While both Canada and the United States have significant existing natural gas reserves, the deliverability is declining and incremental production will come at higher prices because of production challenges in remote and untapped regions. Outlooks by the Alberta Energy and Utilities Board and the National Energy Board indicate that traditional and maturing supply basins in Alberta will not be able to maintain the existing level of production. British Columbia has production opportunities, but they are offshore, and optimism for offshore production in eastern Canada is mixed. Gas supply in the United States is not expected to meet demand expectations. This presentation outlined incremental natural gas supplies for northern Canada, coalbed methane, eastern Canada, and offshore British Columbia. It also outlined the challenges of liquefied natural gas (LNG) projects in Canada, the United States and Mexico. The forecast for increasing natural gas prices has raised the issue of looking at alternatives to natural gas for power generation, but environmental issues continue to favour natural gas. tabs., figs