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Natural gas: Alberta’s other economic engine

Natural gas: Alberta’s other economic engine

Posted on: 5/18/2018 | Author: ATB Financial's Economics + Research Team

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Oil pipelines, oil prices, oil sands – in short, oil gets a lot of attention in Alberta, and rightly so. But it wasn’t that long ago that the big game in town was natural gas.

From prices and drilling to jobs and provincial royalties, natural gas was booming in the 2000s. The US shale gas revolution changed all this. Fracking and horizontal drilling technology have helped boost annual US natural gas production by 203 billion cubic metres since 2009 (US Energy Information Administration). That’s 95 billion cubic metres more than Alberta’s total production.

The glut of natural gas in North America pushed prices down from historic highs in the mid-2000s back to roughly where they were in the 1990s. When you account for inflation, natural gas is currently selling at bargain basement prices.

As a result, natural gas production, exports, drilling, revenues, jobs and provincial royalties are all way down from where they were just a decade ago.

But despite the beating Alberta’s natural gas sector has taken, production is growing and remains a key component of Alberta’s economy. Producer sales of natural gas (including propane, butane, etc.) were almost $14 billion in 2016 or 22 per cent of Alberta’s total oil and gas sector revenue (Canadian Association of Petroleum Producers). Despite the soft prices, the long-term demand for natural gas bodes well for the sector.

Annual natural gas production, Alberta, graph​​​​​​​​​

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