Canadian natural gas winter 2006-07 outlook

This paper provided an outline of the Canadian natural gas commodity market and a forecast for Canadian natural gas supply and prices for the 2007 winter heating season. Since 2001, steady demand growth and slow supply growth have contributed to higher North American natural gas commodity prices. The loss of natural gas supply due to hurricanes pushed North American natural gas commodity prices to record levels in 2005. Canadian natural gas production levels currently exceed domestic gas consumption. In 2005, Canada produced 16.5 billion cubic feet per day of marketable natural gas. Approximately 45 per cent was consumed domestically, and the remainder was exported to the United States. Despite high levels of drilling activity, production of natural gas from western Canada has flattened out since 2001. In 2006, natural gas prices in Canada declined due to the restoration of United States Gulf Coast natural gas production; the absence of any major hurricanes; and a mild winter which left abundant stocks in natural gas storage. Weather events, storage levels, and high crude oil prices are key factors that may influence natural gas markets and prices for 2007. However, short-term price forecasts have indicated that an average-sized residential household in Canada could pay up to $200 less for natural gas in the 2006-2007 heating season than in the 2005-2006 heating season. 2 figs