Updated May 2022
Figure S1.6 shows the historical and forecast AECO-C natural gas price.
The average annual price of AECO-C natural gas was Cdn$3.37 per gigajoule (GJ) in 2021, representing an increase of 60 per cent from 2020. The AECO-C base price is projected to increase to Cdn$3.55/GJ in 2022, dropping to Cdn$3.19/GJ in 2023 and Cdn$3.06/GJ in 2024. From 2025 onwards, the price is projected to increase, reaching Cdn$3.59/GJ by 2031. Based on the low- and high-price cases, prices are projected to range from Cdn$1.85/GJ to Cdn$6.96/GJ by the end of the forecast period.
Natural gas prices, including AECO-C and Henry Hub, increased throughout 2021. The price differential between AECO-C and Henry Hub widened to US$0.90 per million British thermal units (MMBtu), up from US$0.50/MMBtu in 2020.
Forecast for 2022 to 2031
Exports and market access: Exports of natural gas from the Western Canada Sedimentary Basin to the U.S. increased in 2021. However, exports will likely decline over the remaining forecast period as U.S. natural gas production is projected to increase. British Columbia liquified natural gas (LNG) exports are expected to increase market access for Canadian natural gas in the latter part of the forecast period.
Domestic demand: Alberta's demand for natural gas is anticipated to increase over the forecast period, driven by increasing use of natural gas in power generation, petrochemical plants, and oil sands projects. Also, demand for natural gas in propane dehydrogenation plants is expected to grow.
Low- and High-Price Cases
The low- and high-price cases capture the near- and long-term volatility of the AECO‑C price and are estimated using a 90 per cent confidence interval. The factors affect the price cases:
- Economic recovery is slow, and demand is low due to recurring COVID-19 variants.
- North American natural gas production will grow faster than expected.
- Pipeline expansions and LNG projects will either be delayed or cancelled.
- Demand growth from the oil sands will be constrained due to project deferrals.
- Economic recovery is rapid, and demand will increase from the oil and gas industry and electricity sectors.
- North American natural gas production will grow slower than expected.
- LNG capacity rises faster than expected in North America.