“Significant growth” is on the horizon for gas flows between Michigan and Ontario into the Dawn trading hub, ICF adds. Traffic increases during annual heating season demand peaks will exceed 900 million cubic feet per day by 2018 and hit 1.2 billion cubic feet daily by 2021, the consulting firm predicts.

“Markets require gas supply to meet growth and to offset the declining availability of gas from traditional sources, particularly from the Western Canadian Sedimentary Basin,” ICF says. As well, “the project will assist the operation of the competitive market for gas storage in the Great Lakes Basin, providing additional options for shippers in eastern Canada and the U.S.”

ICF projects an annual average growth rate in total Canadian and American gas consumption of 1.2 per cent through 2030. Demand by power stations is expected to account for more than four-fifths of the increase.

In the U.S., the consulting firm forecasts that the use of gas to generate electricity will accelerate by an annual average of more than three per cent. At the same time, Alberta production that has been the supply mainstay of Ontario, Quebec and the northeastern U.S. for decades is expected to shrink by about three per cent per year due to depletion of aging wells. Natural declines of old reserves are expected to be amplified by drilling slumps. Shrinkage of Alberta supplies available to eastern markets is also forecast to result from increased use of gas as fuel for thermal oil sands extraction.

Western Canadian production shows signs of dropping by more than one billion cubic feet per day this year alone, FirstEnergy Capital Corp. estimates in investor research notes. At least for now and in the near future, Alberta output is expected to shrink faster than emerging shale gas production can grow in northeastern British Columbia.

Records kept by FirstEnergy, which makes a specialty of tracking gas markets, show western peak season production has already dropped by about 1.7 billion cubic feet daily or 10 per cent to 15.6 billion. The slippage has been underway since 2006, when soft prices and high costs ushered in a currently worsening drilling decline. Alberta royalty increases are widely blamed for prolonging and deepening the slump.

Besides shale gas, increasingly important new supplies are projected to come from growing international LNG traffic. The Chicago and Dawn trading hubs are expected to use their expanded connection to help buyers tap into all the emerging gas sources by integrating storage facilities for 600 billion cubic feet in Michigan and 250 billion in southern Ontario. At Dawn, trading volumes have already increased by about 50 per cent since 2003 to an annual average exceeding nine billion cubic feet per day.

Tanker cargoes of liquefied natural gas from Trinidad, North Africa and other developing supply sources are forecast to reach the linked central Canadian and middle-western U.S. trading areas with accelerating frequency. “LNG imports are expected to become increasingly seasonal as the international supply increases. In the North American market, LNG imports are expected to be summer peaking, with much of the gas going into storage. During the winter, markets will rely increasingly on storage to meet demand,” ICF predicts. That is, a new international gas warehouse is taking shape and not relying on the market’s old Alberta mainstay to stock the shelves.

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