Canada has long been a major natural gas supplier to the U.S., exporting 8.8 billion cubic feet (Bcf) per day of gas in 2005â€"or about 15% of total U.S. consumption. But this amount of export supply is likely to diminish considerablyâ€"and tighten North American gas marketsâ€"as Canadian oil-sands development continues to heat up. "We estimate that (daily) Canadian gas exports [to the U.S.] will decline each year from 2005 to 2020, and will in the aggregate fall by 5.5 Bcf, or 63%, over this period,” says J. Marshall Adkins, head of the equity-research team for Raymond James & Associates in Houston. "If this occurs, the implied supply gap would represent 9% of total U.S. gas consumption." He emphasizes, "Anything that impairs [Canada’s] ability to export gas is a bullish driver for North American gas prices." While recent stagnation in Canadian gas production would itself be a key factor limiting Maple Leaf gas-export capacity, along with that country’s own rising demand for gas, the researcher stresses there is increasing reliance on gas for Canada’s oil-sands development projects. For more on this, see the September issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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