Natural gas industry growth hinges on LNG: CAPP

The organization representing Canada's oil and gas industry is warning that natural gas production will decline in the next decade if no new export facilities are constructed.

The Calgary-based Canadian Association of Petroleum Producerssaid Canada needs access to global liquified natural gasmarkets to help stimulate the industry.

More than adozen LNG projects are proposed in B.C., but analysts expect only a fewto actually be constructed.

"Accessing the global LNG market can strengthen the long-term viability of Canada's natural gasindustry and backstop the significant economic benefits it creates for Canadians," said CAPPchief executiveTim McMillan in a release.

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Canadian natural gasproduction is about 14.5 billion cubic feet per dayand could fall to 13 Bcf/day in the next ten years. According to CAPP, production could rise to 17 Bcf/day by 2030 if LNG export facilities are developed.

"The window of opportunity for Canada's LNG market will not stay open forever." said McMillan.

Debate over LNG in B.C.

This week, B.C. politicians started debatinga $36-billion LNG agreementwhich the Liberal government claims will lay the groundwork for the province's future.The government needs legislative approvalto enter into an agreement withPacificNorthWestLNG, a consortium led by Malaysian energy giantPetronas. The company is proposing anexport terminal near Prince Rupert.

The project would face a number of hurdles, including opposition from native groupswho could take their fight to the courts.

Iain Black, CEO of the Vancouver Board of Trade, told CBC Newshe was "increasingly confident"that some of the LNG facilities will actually be built. "The government has done more than talk the talk on this, they have laid the groundwork, they are ready to move forward."

Spanish energy company Repsol has also applied to convertNew Brunswick's Canaport LNG plant may be converted into an export terminal.

"We have more [natural gas] than we need," said Adam Legge, an economist and CEO of the Calgary Chamber of Commerce."If we can't get that productto other markets, we are going to simplybe dialling back production, investment. That's unfortunate because it means a reduction in jobs and spending here in Canada."