Traditional markets for Alberta natural gas are oversupplied and prices have been very low and volatile since the summer of 2017. This summer (2018), producers saw the lowest natural gas prices in 26 years.
The AECO price chart from the Natural Resources Canada website shows a decreasing price trend. Reasons for this include:
- Pipeline constraints due to lack of available capacity on some pipelines.
- Lack of global market access.
- Increased production without additional infrastructure to get to export markets.
- Inadequate access to seasonal storage
- Demand in eastern Canadian and US markets is being filled with US production.
- New pipelines to add capacity or to access new markets face regulatory uncertainty and delay.
- Alberta’s distance from eastern Canadian and US markets result in high tolls impacting profit margins and royalties.
- The Western Canadian Sedimentary Basin (WCSB – see map) has been trapped at a stagnant level while US basins have grown dramatically and are displacing traditional WCSB gas markets in Canada and the US.
Impact of Low Natural Gas Prices to Albertans
Royalties that Alberta receives from natural gas production have decreased by 90% from 2005 to 2017. Current loses are estimated at $23 million per day. Royalties were $5 billion in 2008 but dropped to $520 million in 2017. Alberta’s natural gas reserves rival the oil sands for future economic potential.
The Oil and Gas sector employed 533,000 people directly and indirectly across Canada in 2017.  Almost 200,000 people are employed directly in the sector.  These Jobs are at risk if prices do not improve.
Canadian Natural Gas Facts 
- Canada is the fourth largest producer (5%) and fifth largest exporter of natural gas in the world.
- At current production levels, Canada has up to 300 years of supply.
- In 2017, Alberta produced 72% of the marketable natural gas in Canada.
Benefits of Using Alberta Natural Gas
- In 2017, the world consumed 3% more natural gas than in 2016, and beat out renewables as an energy source by 26%. This is due to an increase in consumption in China and India, which is still growing in both countries. 
- Natural gas is the cleanest of all the hydrocarbon fuels.
- Alberta continues to be an innovative province. The Natural Gas Innovation Fund (NGIF) was set up by and is funded by private-sector natural gas producers to support cleantech projects. NGIF are also collaborating with government on GHG reduction initiatives. 
- The price is now competitive with coal for power generation.
- Alberta has world-class environmental, safety and regulatory requirements.
How to Help the Alberta Natural Gas Sector
- Advocate on behalf of the sector at every available opportunity.
- One of the biggest challenges is regulatory bureaucracy and inefficiency that delays progress or blocks it altogether. Implement practical government oversight not bureaucratic uncertainty.
- Support expansion and optimization of the Nova Gas Transmission Limited system to keep up with growth in production.
- Ask TransCanada to reverse its July 2017 Operating Methodology change (Recommendation #7 in the Natural Gas Advisory Panel Report).
- Grow market access. Currently, all exports go to the US; we need access to different markets.
- Support LNG terminals. Canada is lagging behind other countries with vast resource pools such as ours in building LNG facilities for export purposes. Canada’s proximity to valuable Asian markets means the shipping times are reduced resulting in more profits and royalties.
- Defeat Bills C-69 and C-48 in their current forms and support practicable amendments.
Created by Deidra Garyk | www.linkedin.com/in/deidragaryk | January 2019
Source Document unless otherwise identified: 2018 Roadmap to Recovery: Reviving Alberta’s Natural Gas Industry. Natural Gas Advisory Panel Report to the Minister.