Canada could see a boon from rising natural gas prices this year, according to a 2025 forecast by Deloitte.
The “Energy, oil, and gas price forecast” report released Dec. 31, 2024, looks ahead at what is expected to happen in the market for 2025, predicting a price increase could be on the horizon for natural gas.
The news comes on the heels of a year of slumping prices with Canadian producers curbing production amid oversupply in the market.
Western Canada saw historic lows in natural gas pricing in 2024, according to the United States’ Energy Information Administration (EIA).
Three trends hinting at higher natural gas prices for 2025 were identified in the Deloitte report, which it said could benefit Canada’s natural gas exports.
The first was Liquified Natural Gas (LNG) projects in the United States and Mexico under construction this year, opening opportunities for Canadian exports to those countries. Canada’s first major LNG export terminal is also expected to open in 2025 and is expected to export an estimated 1.84 Bcf (billion cubic feet) per day.
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Deloitte also noted a rising demand for natural gas to be converted to electricity for various uses such as data centres, which the U.S. is focusing on building.
Canada’s Energy Regulator said international expectations are for data centres to double by the end of 2026, increasing demand for electricity.
”Natural gas is a strong contender to help meet this growth in demand,” the authors wrote.
”Canada is well positioned to capitalize on the data centre needs, which would, in turn, provide another source of natural gas to help soften the volatility often seen in Canadian natural gas prices.”
The third trend identified in the report was the strong investment that the Canadian oil and gas sector has seen, with $12.8 billion invested in Q2 2024 alone, the authors wrote.
“Investments in Canada’s upstream sector steadily increasing from a low point early 2020, with the pandemic setting in, and is now reaching the highest levels seen since 2017,” the report said.
Sector Sluggish Growth
In 2024, it’s estimated that about 5 percent of total gas production from Canada was shut in.
In the fall of 2024, companies like Canadian Natural Resources Ltd. said it would slow some natural gas production until prices strengthened. It anticipated that would be early 2025, when the Shell-led start up LNG Canada export project saw an increase in demand.
Calgary-based Advantage Energy also began shutting in up to 130 million cubic feet a day of dry gas in September 2024.
The EIA said that production between January and Oct 2024 for Canada was 3 percent higher than in 2023, and 11 percent higher than the 5-year average.
”Because natural gas production has risen in advance of demand for natural gas for LNG exports, more natural gas has gone into storage. As of August 31, natural gas inventories in Canada were 37 percent (6.5 Bcf) above the five-year average,” EIA said.
Reuters contributed to this report.
