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Calgary Herald

Natural gas prices have collapsed in Western Canada, but producers are ramping up spending

Article content Two of the country's largest natural gas producers announced new or accelerated growth plans this week — betting better days are head for the sector despite Western Canadian gas prices that are currently 'well below' the cost of supplying the fuel to markets. Article content Tourmaline Oil Corp., Canada's largest natural gas producer, announced plans this week to grow production 30 per cent by 2031 — echoing predictions from TC Energy Corp. and others that demand for natural gas across North America will accelerate in the next decade. Still, natural gas prices in Western Canada are currently hovering near 40-year lows. Article content Article content Article content 'We will be a materially larger, more profitable company right about the time that we expect the continent to be getting short on resource,' Tourmaline chief executive Mike Rose said Wednesday, outlining plans for an initial $350 million spend in northeastern British Columbia's Montney shale gas region. Article content 'We can slow down if prices aren't cooperating, or we can accelerate if prices are ahead of what we're expecting,' Rose said, adding, 'That doesn't seem to happen very often.' Article content The company also announced a new eight-year supply deal with German energy firm Uniper SE on Wednesday that will provide 80,000 million British thermal units per day (MMBtu/d) of natural gas to export terminals on the U.S. Gulf Coast beginning in November 2028. Article content Article content Tourmaline said it aims to increase production to to 850,000 barrels of oil equivalent per day (boe/d) by 2031, up from roughly around 629,265 boe/d in the first half of this year, with new gas plants and transportation infrastructure. Article content Article content Rival gas producer ARC Resources Ltd. said it is raising its capital spend for the year, closing an acquisition from Strathcona Resources Ltd. and accelerating growth plans for its Attachie project in northeastern B.C. Article content Article content Despite its optimistic outlook for growth, the company said it has elected to shut-in all of its dry gas production for the moment, amounting to approximately 60,000 boe/d, until prices recover. Article content 'We just refuse to waste the resource when we don't have to wait that long to make a better rate of return on those assets,' Bibby said, noting the company expects prices in Western Canada will improve later this year and through 2026 as LNG Canada continues to ramp up to full capacity at its shipping terminal on the B.C. coast.