Raise the Hammer
By Ryan McGreal
Published October 06, 2006
Raise the Hammer has been warning for some time that the long term prospects for natural gas production in North America are poor.
A new article in the Globe and Mail confirms what industry observers have known for some time: in North America, natural gas is past its production peak and is going to decline rapidly:Canada's natural gas exports to the United States will fall by nearly two-thirds by 2020 as new unconventional sources fail to offset declining production in Alberta and rising domestic demand, a new study from Natural Resources Canada suggests.
The article notes that politicians are completely ignoring the natural gas crisis staring down at us.
The report represents a stark contrast to the message of bullish federal and provincial politicians and oil industry officials who have assured consumers in the United States that they can rely on Canada to help meet their growing energy needs.
It also points out that the burden of Canada's oil production is going to shift 80 percent to Alberta's tar sands, which also depend on natural gas to operate.
Canadian natural gas production is not going to peak until 2010 or 2011, but because United States production is already in decline, exports are going to swallow a growing share of Canada's production.
If Canadians think Canada can simply cut its exports to the US to maintain enough supply for domestic needs, they're in for a nasty surprise. Kurt Cobb at Resource Insights suggested in August that once Canadian natural gas production goes into decline, the NAFTA provision that requires Canada to maintain its gas exports to the US is going to lead to some irate Canadian gas consumers.
The Globe article also points out that the growth in tar sands production will dramatically increase Canada's production of greenhouse gases:
Under the NRCan scenario, Canada's greenhouse gas emissions would climb to 828 megatonnes in 2010 - 253 megatonnes above the country's Kyoto commitments - and would rise to 897 megatonnes in 2020. Nearly 60 per cent of that increase is expected to occur in the oil sector, primarily from producing and refining the bitumen from the oil sands.
Not surprisingly, the Federal government, which is based in Alberta and gets much of its corporate support from the energy sector, is unwilling to prevent this from happening.
The Conservative government has indicated it will introduce regulations to limit the growth in such emissions, although not at the expense of reining in oil sands production.
North American natural gas consumers lucked out last winter, which was unseasonably mild. Climate change notwithstanding, we cannot expect that luck to hold out indefinitely. Sooner or later, North America will have to face the fact that our main source of residential heating and a major source of electricity generation, not to mention a key component of Canada's oil industry, is on a sharp and permanent decline.
The longer our government denies the challenges we face, the less prepared we will be when the other shoe finally drops.
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