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Wednesday, January 16, 2019
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Decade low natural gas prices mean big changes for industry

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"Companies are not only looking at shifting where they're investing their dollars, but selling assets, looking to merge, putting the whole company up for sale."

Leach says there are a lot of small natural gas producers up for sale right now, but their prices are not very attractive and buyers are few and far between. However, there are some investors with deep pockets that are picking up natural gas assets now when they're cheap, and sit on them until prices recover. Bigger companies like EnCana have more options, and can get Asian companies to partner with them to get them through.

While getting prices back up is a high priority for the industry, President and CEO of Petroleum Services Association of Canada Mark Salkeld says that if prices were to raise again, there could be some negative effects as most companies are now busy after switching focuses.

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"It's a good and a bad situation," he says. "We would like gas prices to be higher because that's the better fuel, and we've got a lot of it here, but if gas prices started to come up, it could be really busy here."

He refers to when Hurricane Katrina hit New Orleans as a time when prices skyrocketed, and the demand was "crazy" to keep up with. $3.50 per CFM is at the very bottom edge of profitability for companies that have infrastructure in place, and $6 – $7 is where both producers and consumers will be really happy. Salkeld says the key to sustainability will be to increase demand domestically as well as overseas, as the U.S. is suffering from the same problem.

"We need to come up with ideas on how to improve demand and then that automatically helps raise the prices, he argues."

That will come mainly from Liquefied Natural Gas ventures, as well as initiatives like changing over vehicles like buses and transport trucks to run on natural gas. Leach agrees, and says he's thankful that the B.C. government is prioritizing building LNG facilities, as there are other producing nations that want to be in that market as well.

"There's this great big energy storehouse there in Northern British Columbia," he points out, "and it's a huge asset for the future for the entire province, and that gas will never be developed at today's prices unless it's going to Asia where they're going to pay enough money for that gas to come out of the ground."

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Author

Erica Fisher

Erica is a reporter for Moose FM and energeticcity.ca in Fort St. John, B.C. She grew up in Victoria, B.C. and received her Bachelor's Degree in Journalism from Concordia University in Montreal, Quebec.

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