Last week, we reported that oil production in Alberta broke another seasonal record in March.

Although not breaking the records set in the mid-2000s, Alberta’s marketable natural gas production was also higher in March with production up by 4.5% compared to 12 months earlier.*

Looking at the first three months of the year, production was 2.9% higher than in Q1 2024 and 10.7% higher than 10 years earlier.

We expect that production will continue to be robust going forward as new liquified natural gas (LNG) export facilities enable more exports of North American gas to Asia. Canada’s first liquefied natural gas export plant (LNG Canada) is set to start operations later this year.

If sustained, weaker crude oil prices may also boost natural gas extraction as producers put more emphasis on natural gas-rich areas over pure oil-producing regions.

Barring another change in policy, U.S. tariffs are not expected to have a major direct impact on production as natural gas is exempt from the 10% tariff on energy as long as producers demonstrate they are compliant with the rules of origin requirements in the Canada-UnitedStates-Mexico Agreement.

The price of Alberta natural gas was not particularly strong by historical standards in the first quarter, but the AECO** benchmark was 5.1% higher than over the same period in 2024. As with production, increased export options are expected to provide some lift to prices going forward.

Our most recent forecast sees the annual AECO natural gas price benchmark averaging $2.4/MMBtu this year, up by 60% compared to the $1.5/MMBtu averaged last year.

*Because natural gas extraction is a highly seasonal business it is best to compare the same periods to one another on an annual basis rather than month-over-month variations.

**The AECO spot price is the Alberta gas trading price.

Answer to the previous trivia question: The last time a Canadian team won the Stanley Cup was in 1993 when the Montreal Canadiens defeated the L.A. Kings in five games.  

Today’s trivia question: Kitimat, B.C. has become a LNG hub for Canada with several major projects on the go. What is the population of Kitimat?