Alberta Natural Gas Prices Set to Rise Next Year

A new report from advisory firm Deloitte predicts a significant increase in Alberta natural gas prices next year, driven by the country's first West Coast export facility becoming operational. The Alberta benchmark AECO price is forecasted to rise from an average of $2.20 per mmBTU in the second half of this year to $3.50 per mmBTU in 2026, compared to $1.36 per mmBTU last year. By 2032, the average AECO price is expected to reach $4 per mmBTU.

With LNG Canada shipping its first cargo of gas to Asia from Kitimat, B.C., Alberta producers now have access to new markets beyond the United States. Deloitte partner Andrew Botterill highlights the opportunity for producers to increase volumes and consumers to expect higher bills for natural gas usage.

Deloitte's forecast suggests that Canadian producers may not meet demand from current LNG export projects for the next four to seven years, indicating strong pricing in Alberta for the foreseeable future. For oil, Deloitte predicts West Texas Intermediate to average US$72 a barrel in the second half of this year, with fluctuations in the coming years.

Canadian companies are expected to manage the oil price range well, leveraging a strong U.S. dollar and benefiting from a narrowed price discount for western Canadian heavy crude due to the Trans Mountain pipeline expansion. Despite cautious capital deployment, companies are navigating the market effectively.

Source: BNN Bloomberg.