Unconventional production in Canada in 2020 is set to decline by 5% from 2019, subsequently rebounding at a 4% annual growth. The main contribution of shale production will be in natural gas and is expected to reach an output of 12.8 billion cubic feet of natural gas per day (bcfd) by 2025.
Currently, the majority of unconventional production is coming from gas shale deposits in Alberta and British Columbia. These plays have a vast untapped resource estimated to amount to 1,000 trillion cubic feet (tcf). However, a larger development of the resource is dependent on higher demand for natural gas mainly from LNG plants, power generation, and petrochemicals. Also remaining competitive against natural gas produced from US shale plays and maintaining existing exports to the US will have an impact on the viability of Canadian shale natural gas.
With respect to main players in the Canadian unconventional sphere, it is few key operators that have been dominating the market share. In 2020, 15 operators are estimated to account for up to 50% of total Canada’s unconventional production. In addition, a characteristic feature for small to mid-sized companies operating in Canada unconventional plays is their investment in gathering pipelines and natural gas processing with the aim of better integrating their production with final commodity consumers.
Currently, there are four LNG projects planned and six announced in Canada, with seven of them being on the West Coast. If built their total capacity would amount to 13.5 bcfd. However, at this time there is only one LNG Liquefaction project with an final investment decision (FID). LNG Canada will begin operations in 2025 and will have a 3.7 bcfd production capacity. Due to the current economic uncertainty, for the rest of the planned projects reaching the FID is likely to be delayed and can potentially be indefinitely postponed.
LNG projects have also highlighted the relevance of having ample capacity to transport natural gas towards upcoming LNG facilities. Currently four pipelines are being considered to feed upcoming LNG liquefaction projects. The largest volume planned natural gas pipeline, Coastal GasLink Project, is scheduled to come online in 2023 and have a capacity of 2.1 bcfd. The end point for this project is the West Coast LNG Canada project, which is the only LNG facility with an FID at this time.