SASKENERGY 2017-18 ANNUAL REPORT
Changing Saskatchewan Natural Gas Supply
The following chart shows AECO natural gas prices:
AECO MONTHLY INDEX HISTORICAL PRICES
Saskatchewan is a net importer of natural gas. Annual demand exceeds production within the province and in 2017-18, approximately 65 per cent of gas consumed in the province was imported from Alberta. Saskatchewan had been a net exporter of natural gas and through the shale gas revolution, transitioned to a net importer of natural gas. In addition to the natural gas production decline within the province, a growing demand sector is significantly increasing the year-over-year gas supply requirement that must come from outside of Saskatchewan.
$14.00
Conventional Natural Gas Production
$12.00
$10.00
$8.00
Shale Gas Revolution
$5.00
$4.00
Forward Price at March 31, 2018
$2.00
CHANGE IN SASKATCHEWAN SUPPLY & DEMAND
$0.00
250 200 150 100 50 0 450 400 350 300
Net Importer
Net Exporter
Steady Supply
Net Importer
Forecast
Traditionally, most natural gas in Saskatchewan is priced at a differential to the AECO price. This AECO to TEP (Saskatchewan) differential for the 12 months ending March 31, 2018 averaged $0.87 compared to $0.13 for the year prior. This created an average increased price of $2.78 per GJ at TEP versus $2.40 per GJ the fiscal year prior. With the NGTL system constrained, the AECO to TEP differential settled higher and had increased volatility. Production Continues Despite Low Market Prices Since the beginning of the shale gas production revolution, approximately eight years ago, horizontal drilling and hydraulic fracturing technologies continue to advance and have allowed producers to continue to drill despite low natural gas prices. This cost effective production has resulted in North American supply actually increasing slightly despite the strong supply position. The relative low, flat shape of the forward price curve suggests that the market expects the excess supply to remain for the foreseeable future. However, a fundamental shift in demand is in progress as new gas-fired power generation and other natural gas intensive industries have experienced substantial growth in recent years.
Alberta Supply
Saskatchewan Supply
Saskatchewan Load
24
Made with FlippingBook Ebook Creator