Natural gas sector ready for pumped up profits Claudia Cattaneo , Financial Post Published: Thursday, August 09, 2007 Relief is on its way for Canada's battered natural gas industry, a new report said today. Steady increases in natural gas prices this year means the sector will report solid profit growth during the next four years, the Conference Board of Canada said in an outlook report.
"The industry's profitability will be helped by continued price increases that more than offset production declines," said Louis Thriault, Director, Canadian Industrial Outlook Service. "Profits are expected to grow annually by more than 10% on average over the next four years, due almost entirely to increasing North American demand that will push prices upward."
The report said natural gas production in Canada will begin to fall this year and decline through 2011. Profits will rebound to almost $10.8-billion this year, from $9.8-billion in 2006, when they were under pressure from accelerating costs and softer natural gas prices.
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"Growth in costs is expected to further moderate in 2008 and 2009, before rising again in 2010. But with price growth surpassing cost increases in 2010 and 2011, profits are forecast to exceed $15 billion by 2011."
The natural gas sector in Western Canada has been in a slump for the past 18 months as many new projects became uneconomic. There is widespread concern that the slowdown could continue until next year due to high gas inventories in North America.