Canada Isn't Natural-Gas Panacea for U.S. --- Doubts Are Growing About Region's Ability to Boost Exports
CALGARY, Alberta -- Think Canadian natural gas will easily and cheaply cover a U.S. supply shortfall? Think again.</br></br>With U.S. gas producers finding it tough to boost output, Americans are looking north to help satisfy demand. Canada supplies about 16% of the natural-gas consumed by its southern neighbor, up from 11% in 1995. But with its own productive capacity peaking, Canada isn't likely to provide a sustained fix for U.S. gas consumers, specialists here caution.</br></br>That could lead to a supply crunch when a U.S. economic recovery takes hold. According to most analysts, U.S. demand for natural gas probably will expand steadily in the long term, due mainly to the fuel's increasing use in electricity generation, while domestic supply stays flat. Even in its latest short-term forecast for natural-gas demand -- revised to reflect economic fallout from the Sept. 11 terrorist attacks -- the U.S. Energy Information Administration projects domestic demand rebounding by 3.9% in 2002 after falling 2% this year.</br></br>To address anticipated demand growth, U.S. energy companies have been snapping up natural-gas companies and assets in Canada, made cheaper by low natural-gas prices and the strong U.S. dollar. In October, for example, Burlington Resources Inc., Houston, offered $2.1 billion for Canadian Hunter Exploration Ltd., Calgary.</br></br>But doubts are growing about Canada's ability to keep boosting its gas exports in the long run.