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Canada's Unconventional Natural Gas Future

Keith Kohl

Written By Keith Kohl

Posted February 9, 2012

It was a mission to China with only one possible outcome.

On Tuesday, I mentioned that Canadian Prime Minister Stephen Harper had headed across the Pacific to improve trade relations.

Trillions of dollars in future revenue were at stake.

Of course, Harper knows deep down that China is desperate for one thing he and his country can offer: a safe, secure supply of energy.

Furthermore, we know it isn’t just the bituminous sands in Alberta that has China’s attention…

No, they’re after another one of Canada’s resources.

Rumor has it that as Harper boarded his plane, he turned to an aide and muttered, “Let’s just hope they don’t bring it up.”

Did he have good reason to worry?

A Conventional Crisis

The crisis that Canada is experiencing with their conventional gas production is something I have touched on in the past.

And with the prospect of a Sino-Canadian relationship blossoming in the future, it’s imperative that we take a closer look at how they’ll be supplying natural gas to the Chinese.

Canada’s natural gas industry has been active for more than a century, with the country’s first gas exports occurring in 1889. The real crux of Canadian natural gas is the Western Canadian Sedimentary Basin (WCSB):

wcsb map hi

There’s no question as to how important it is for Canada.

The area contains about two-thirds of the country’s gas reserves, 90% of its usable coal resources, and the 1.6 trillion barrels of oil-in-place found in the three major oil sands locations.

But the Prime Minister does indeed have reason to worry…

You see, he fully understands the situation surrounding Canada’s conventional natural gas.

To begin with, conventional gas production in the Western Canada is heading in just one direction: down.

conventional gas peak

Growing decline rates aren’t helping matters:

small wcsbclick to enlarge

What’s more, despite the fact that gas producers are drilling more wells than ever before, productivity has fallen significantly…

well productivity

Even in Alberta — the most dominating producer among the Canadian provinces — marketable natural gas production fell by 26% during the last decade. Remember, approximately 70% of Canada’s gas output comes from this region.

All of these factors add up to a very profitable future in Canada’s unconventional gas plays.

Growth that Investors Will Bank On

Let’s face reality here. We know what’s driving Canada into the Asian LNG markets.

We’ll let this flat chart speak for us:

5 year gas

So why would Canada wants to ship its gas to the Far East?

Well, considering how flush the United States is with natural gas, who can blame them…

Even our own natural gas companies have been moving their activities into oil.

More to the point, Asian countries are willing to pay a 400% premium for natural gas, compared to U.S. prices. That alone could prove fruitful when Canadian investors see serious growth over the next few decades.

We can’t forget the kind of growth that U.S. companies have had over the last four years in developing unconventional oil and gas resources.

In fact, these stocks have been absolutely crushing major indexes. During the last six months, the S&P 500 hasn’t even been close:

SP 500

That blue line is just one of many Bakken stocks my readers have been capitalizing on lately.

And I can tell you that it’s not too late to join their success.

The chart above shows the kind of performance we’re going to see with stocks breaking into Canada’s unconventional gas sector…


Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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