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NEB energy forecast 6 months later

May 16, 2012

In Nov-11 the National Energy Board released an energy supply and demand forecast for Canada to 2035. Yet after only 6 months the natural gas projections seem doubtful.

National Energy Board study published a 64-page report called Canada’s Energy Future: Energy Supply and Demand Projections to 2035.

The Henry Hub price of natural gas in the Reference Case is assumed to increase from US$4.50/MMBtu in 2011 to US$8.00/MMBtu in 2035 (in U.S. 2010 dollars). The increase in the real price reflects growing demand for natural gas in North America and gradually increasing costs of discovering and producing the gas. The NEB’s projection for its reference case shows a more or less steady increase from the $4.50 price to $8.00.

The NEB admits that “future natural gas prices are a key uncertainty in the production projections. The Reference and four sensitivity cases cover a wide range of natural gas prices to assess possible price volatility in the future.” (p.34)

Mackenzie gas is assumed to begin flowing in 2020 in the reference case, when gas is above $5.50 US per MMBtu, and in scenarios assuming high prices and economic growth, but doesn’t get tapped until 2030 in the slow growth scenario and not at all in the low price case.




The current price for natural gas is around US$2.50/MMBtu. The NEB price projection is significantly higher than the market price. A mild winter is undoubtedly a factor, yet the NEB forecast seems way too high at the onset.