Updated August 2017
In 2016, Alberta demand accounted for an estimated 50.5 per cent of Alberta production, with the remaining gas removed from the province. The oil sands sector continued to be the largest source of Alberta demand at 29.6 per cent, even with a drop in demand due to the Fort McMurray wildfires. Oil sands demand was followed by electricity generation at 16.3 per cent, which was up 5.7 per cent in 2016. Reprocessing plant shrinkage had the biggest decline in demand, at 5.2 per cent, as less gas was removed from the province in 2016, which reduced the amount of gas flowing through straddle plants.
Alberta demand for natural gas, as shown in Figure S5.6 [Tableau], is expected to grow primarily due to demand from the oil sands and electricity generation sector, which are expected to grow at an annual average of 5.4 per cent and 2.7 per cent, respectively. This year’s forecast for gas demand in the oil sands is lower than previous forecasts as a result of a decrease in the forecast for oil sands production. Gas demand for electricity generation has increased in this year’s forecast as a result of the Climate Leadership Plan, which calls for the phase out of coal-fired electricity generation by 2030. Gas demand for electricity generation is projected to be 2.0 per cent higher by the end of 2026.
Reprocessing plant shrinkage is expected to decrease by an annual average of 5.6 per cent as removals decrease and less gas flows through straddle plants. Gas demand by petrochemical plants is expected to increase at an annual average rate of 1.0 per cent throughout the forecast period as a result of incentives provided under the proposed Petrochemical Diversification program to develop petrochemical facilities. Residential and commercial demand is expected to remain stable throughout the forecast period based on expectations of relatively stable population growth over the forecast period.
Although more natural gas was consumed in the province than was removed in 2016, gas removals from the province did increase over the summer. Due to the Fort McMurray wildfires causing oil sands facilities to shut in and demand for natural gas to fall, Alberta natural gas prices dropped, resulting in removal markets purchasing more Alberta natural gas. When provincial demand was restored after the wildfires, the differential narrowed and removals slowed. Exports to the northeast and midwest of the United States have been declining for some time due to increasing U.S. shale production, particularly in regions that had traditionally been serviced by Alberta production. U.S. production continues to supply eastern Canada, further eroding Alberta’s market share. Removals are expected to fall to 73.6 million cubic metres per day (106 m3/d) in 2026, which is up slightly from the previous forecast of 70.6 106 m3/d as a result of oil sands demand being revised downwards. For information on natural gas pipelines, see the Transportation and Facilities section.
Under the Alberta Gas Resources Preservation Act, producers are required to apply to the AER for a permit authorizing gas removal from the province. As part of the act, the AER determines the amount of gas that is available for removal, which was calculated to be 263 billion m3 for 2016, suggesting adequate supply for the expected amount of removals over the forecast period. More detail on the calculation can be found under the natural gas permitting section.