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2007 Natural Gas Exports and Imports Summary

Volumes

Canadian Natural Gas Net Export Volumes 1998-2007

Canadian Natural Gas Net Export Volumes 1998-2007

  • In 2007, the net volume of natural gas exported from Canada to the United States (U.S) was 94.1 billion  m3 (3,321 Bcf). While these net export volumes are not a record, the stand-alone gross natural gas exports and imports each set annual volume records.
  • Although net natural gas export volumes increased year over year, the 2007 level of 94.1 billion  m3 (9.1 Bcf/d) remains well below net exports during the 2000-2002 period when levels were close to 99 billion  m3 (9.6 Bcf/d).
  • Gross exports of Canadian natural gas to the U.S. in 2007 exceeded expectations and set a new record at 107.3 billion  m3 (3,787 Bcf or 10.4 Bcf/d). This represented a 7.5 billion  m3 (264 Bcf) increase over 2006.

Canadian Natural Gas Export Volumes 1998-2007

Canadian Natural Gas Export Volumes 1998-2007
  • Gross imports of natural gas into Canada in 2007 also set a new record in 2007 at 13.2 billion  m3 (466 Bcf or 1.3 Bcf/d). This represents an increase of 36% or 3.5 billion  m3 (125 Bcf) over 2006.

Canadian Natural Gas Import Volumes 1998-2007

Canadian Natural Gas Import Volumes 1998-2007

Prices and Revenues

  • Prices received by Canadian exporters declined from $7.15/GJ in 2006 to $6.82/GJ in 2007. Canadian importers also paid lower average prices for natural gas – $7.16/GJ in 2007 compared with $7.68/GJ in 2006.
  • Canadian exporters received $27.8 billion in revenue in 2007, a small increase over the $27.2 billion received in 2006 but well off the record level of $35.6 billion received in 2005.
  • Canadian importers' total cost for 2007 natural gas imports was $3.5 billion, up from $2.8 billion the previous year.
  • As a result of the record high volumes, the gross revenue on exports was the second highest on record at $27.8 billion. The net revenue on exports was $24.3 billion, also the second highest on record.
  • Export prices for 2007 were the lowest experienced since 2003. At an average of $6.81/GJ, prices were down $.34/GJ from 2006.
  • Import prices for 2007 were the lowest experienced since 2002. The $7.16/GJ average import price for 2007 was the lowest since 2002 and was down $.52/GJ since last year.

Canadian Natural Gas Export Revenue, Import Expense and Prices 1998-2007

Canadian Natural Gas Export Revenue, Import Expense and Prices 1998-2007

Commentary

The vast majority of the gas imported in to Canada takes place in Southern Ontario where Union Gas has interconnections with Vector Pipeline (“Vector”) and Michigan Consolidated Natural Gas Company (“MichCon”) and where the TransCanada Pipeline interconnects with the Great Lakes Gas Transmission pipeline. The increase in imports reflects expanded capacity on the Vector pipeline coming in to service in late 2007, competitive pricing at trading hubs on Vector and MichCon, and a general increase in the desire of gas users to diversify their portfolio with imports from the U.S. Midwest.

In spite of an estimated 3.6 billion  m3 decline in domestic natural gas production levels in 2007, there was a somewhat unexpected year over year increase in net exports. Higher domestic storage levels heading into 2007 and weaker domestic demand can explain some of the unexpected increase in exports. On this topic, it is noteworthy that the net exports reported by industry were considerably higher than the throughput numbers available from pipeline operators. Both the NEB export statistics and the U.S. Energy Information Administration imports statistics show an unusual departure from their traditional tracking with the pipeline throughput numbers. NEB staff will be reviewing the reported exports with both industry and pipeline companies in order to determine if any revisions are required.

Comparative Net Export Volumes

Comparative Net Export Volumes

Outlook

  • Several structural market factors are currently shaping the market outlook for Canadian natural gas exports to the U.S. for 2008. We continue to expect downward pressure on export volumes as a result of:
    • Increases in domestic demand for oil sands operations in Alberta and for increased gas-fired power generation in Ontario.
    • Lower drilling activity in the Western Canadian Sedimentary basin may also impact the amount of gas available for export.
    • A rise in U.S. unconventional gas production.
  • We expect the trend towards higher imports to continue as gas buyers in Southwestern Ontario seek to diversify their supply sources to address concerns about declining WCSB supply.
    • Importing gas from the U.S. Midwest represents a good opportunity for diversification since 2008 marks the beginning of a trend to transport U.S. rocky mountain production into pipelines feeding the U.S. Midwest. The first portion of the Rockies Express pipeline (REX West) came in to service in January 2008 and will transport up to 28.3 million  m3 (1 Bcf) per day east out of the Rockies to interconnections with several U.S. pipelines serving the U.S. Midwest.
    • The potential for higher imports in the future will be supported by a 5.66 million  m3 (200 MMcf)) per day expansion to Vector, which occurred in late 2007.
  • The National Energy Board will continue to monitor these evolving market conditions, including more immediate market concerns such as weather, water levels for hydro generation and hurricane activity.

 

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Date Modified:
2011-12-05