Natural Gas Market Assessment

Excess productive capacity has gradually decreased in the natural gas market. This report provides information and the Board's observations on these changed conditions and then looks ahead to examine the prospects for gas supply over the period 1993 to 1996. The analysis and outlook are directed to both peak day and annual gas supply. A historical review of gas supply over 10 years is provided, including observations on the excess of deliverability over production, changes in remaining reserves, the trend in reserves-to-production ratios, trends in production, connection rates, gas storage, the response of Alberta supply in peak demand periods and recent developments. The Baord's methodology for estimating productive capacity is described and the results of the Board's analysis of Western Canada's productive capacity are presented and compared with other deliverability studies. A summary of the current and anticipated pipeline capacity in the producing provinces is presented and estimates for productive capacity are compared with pipeline capacity. Observations on factors influencing the interpretation of results conclude the document.

This document is part of the National Energy Board's ongoing monitoring of the natural gas market. It focuses on a specific part of the structure and functioning of the Canadian natural gas market, that of long-term contracts of over five years duration. The report analyzes the changes that have occurred in long-term contracts governing the sale of western Canadian gas into domestic and export markets and identifies the important trends in contracting practices that have emerged since deregulation. The analysis is based on more than 165 domestic and export contracts representing the first arm's length or primary sale between a party representing producer interests and a party representing consumer interests.

Deregulation of natural gas markets in the mid-1980s brought about significant new trends in gas contracting practices, such as increased flexibility for buyers and sellers, simpler and shorter contract terms, and a wider range of contracting options and services. This update identifies those changes that have occurred since 1991 in long-term contracts, including both new contracts executed since 1991 as well as changes to those that were in effect in 1991. The update is based on analysis of a data base of almost 200 long-term contracts, including most export contracts filed with the National Energy Board as of May 1996. The main focus of the update is on contract terms and conditions. It documents the impact of the withdrawal of US interstate pipelines from their traditional merchant function on long- term contracts for Canadian gas, discusses trends with respect to pricing and pricing indices used by the contracting parties, and examines mechanisms used to secure contractual obligations as compared to earlier periods. The final section identifies important differences between domestic and export contracting patterns.

Originally published in 1983, Broadman and Montgomery present an agenda for further research into deregulated natural gas markets by relating natural gas production, transmission and distribution with the economic function of contracts and local distribution companies. This work raises fundamental issues that could arise with the deregulation of the natural gas industry and outlines analytical methods that could be used to predict any problems that might arise and possible changes to policy. This title is of interest to students of Environmental Studies and professionals.