Market Snapshot: Even with LNG, net pipeline exports of natural gas expected to decline

Release date: 2016-06-15

Net pipeline exports of natural gas from Canada could decline to essentially zero by 2040, according to the NEB’s Canada’s Energy Future 2016 Reference Case projection.

The Reference Case scenario assumes that liquefied natural gas (LNG) exports start in 2019 at 0.5 billion cubic feet per day (Bcf/d), and gradually increase to 2.5 Bcf/d by 2023. LNG export volumes are a key driver of natural gas production, which increases from 15.1 Bcf/d in 2015 to 17.9 Bcf/d by 2040. However, this production growth is more than offset by growing domestic demand for natural gas. Increasing use of natural gas for electricity generation, as well as in the oil sands sector, leads to domestic demand for natural gas increasing from nearly 10 Bcf/d in 2015 to over 15 Bcf/d in 2040.

Source and Description

Source: NEB

Description: This combination stacked bar and line chart illustrates Canadian production, net pipeline exports, and LNG exports from 2012 to 2040. Canadian production generally trends upward, from 15.1 Bcf/d in 2015 to 17.7 Bcf/d in 2025 where production remains largely flat until 2040. The stacked bar chart illustrates exports categorized as net pipeline exports or LNG exports. LNG exports start in 2019 at 0.5 Bcf/d and grow to 2.5 Bcf/d by 2023 and remain at this level until 2023. Net pipeline exports, determined as the difference between production and domestic demand, and LNG exports are projected to decline from 5.1 Bcf/d in 2015 to 0.2 Bcf/d in 2040.

Net export projections are calculated as the difference between Canadian natural gas production and demand. As domestic natural gas demand increases more quickly than production, net exports of natural gas decline steadily over the projection period. Accounting for assumed LNG export volumes, net exports of natural gas by pipleine to the U.S. decline from 5.1 Bcf/d in 2015 to 0.2 Bcf/d in 2040.

It is important to note that the projections in Canada's Energy Future are for net exports, which are exports less imports. However, projections of imports and exports are not calculated separately. This implies that exports could be increasing, decreasing, or relatively steady depending on import levels. With new sources of natural gas in the U.S., like the Marcellus and Utica shales, located close to key consuming regions like Ontario and Quebec, imports into Canada are likely to remain steady or even increase; implying pipeline exports are likely to decline over the projection period.

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