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Canada’s Natural Gas Crisis Is Being Ignored

Canada’s Natural Gas Crisis Is Being Ignored

Gas pipelines

“Alberta and its natural gas producers face a daunting crisis,” Alberta’s Natural Gas Advisory Panel said in a report in December, highlighting the challenges that natural gas producers in Alberta face in market access and pricing for their commodity.

Industry officials and analysts say that the situation with the steep natural gas discounts in Canada to the U.S. Henry Hub benchmark is similar to the huge discounts of Canada’s heavy oil benchmark—the Western Canadian Select—to the U.S. benchmark West Texas Intermediate (WTI).

The record-low oil prices in Canada have attracted a lot of media attention in the past few months, but the steep discounts and volatile prices of Alberta’s natural gas have received less attention, although the pricing and problems are similar.

“It’s absolutely a similar situation,” Advantage Oil and Gas president and chief executive Andy Mah told the Financial Post.

Like oil, natural gas prices have also been suffering from the steep discounts, but the attention has been on oil “because of the slower decline in natural gas prices,” Mah told Geoffrey Morgan of the Financial Post.

According to Samir Kayande, director at RS Energy, the natural gas prices discounts have been plaguing the industry for longer and the problem has been “far worse than it is for oil.”

“Gas is such a forgotten commodity now,” Kayande told the Financial Post.

Alberta’s government has recently taken drastic measures to prop up the price of heavy oil in Canada, but it has yet to address the distressed natural gas pricing.

Natural gas “is just as important (as oil), it’s just not getting the same kind of attention as oil” but that could soon change, a government official told the Financial Post.

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