Natural Gas: Why Canadian exports have fallen

Rising natural gas production south of the border means Canada must diversify markets.

Canada exports natural gas to one customer: the United States. Over time, our best customer has become our biggest competitor. U.S. natural gas production has risen dramatically due to innovations in horizontal drilling and hydraulic fracturing, allowing the economic extraction of natural gas from low permeability formations like shale.

The result: Canadian exports into the U.S. are falling steadily. As well, the value of those exports has fallen due to low natural gas prices in North America, brought on by a persisting regional oversupply. Meanwhile, the U.S. is increasing exports into Quebec and Ontario, and is also starting to export LNG to markets overseas.

To maintain a robust natural gas industry, Canada must diversify its own markets–primarily via LNG exports to new customers overseas.