Natural gas producers in Western Canada have white-knuckled it through months of depressed prices, with the expectation that their fortunes will improve when LNG Canada comes online in the middle of next year.
But the supply glut plaguing the industry this fall is so large that not everyone is convinced the massive facility's impact on pricing will be as dramatic or sustained as once hoped.As the colder temperatures set in and Canadians turn on their furnaces, natural gas producers in Alberta and B.C. are finally starting to see some improvement after months of low prices that prompted some companies to delay their growth plans or shut in production altogether.
The bearish prices have come due to a combination of increased production levels — up about six per cent year-over-year so far in 2024 —as well as last year's mild winter, which resulted in less natural gas consumption for heating purposes. There is now an oversupply of natural gas in Western Canada, so much so that natural gas storage capacity in Alberta is essentially full.
"And so we have this temporary period of time where there’s more gas than there is places to put it.” "That sink of 2 Bcf a day will logically take three-plus years to fill. And then if LNG Canada Phase 2 happens, then obviously that’s even more positive," Rose said. Feit, the analyst for Enverus, said there's no doubt LNG Canada's opening will be a major milestone that will help to support natural gas pricing in Western Canada. He added there are other Canadian LNG projects in the works that would also provide a boost in the longer-term, such as LNG Canada's proposed Phase 2, as well as potential increased demand from the proliferation of AI-related data centres and other power-hungry infrastructure.
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