Canada: Quebec Benefits from Gas Investment in Other Provinces

Although Quebec will benefit from investment in natural gas in Western Canada, its potential development of shale gas remains speculative and dependent on the regulatory environment in the province, according to a Conference Board of Canada report.

“Clearly, the natural gas industry contributes to Canada’s economy and to the economy of each province,” said Pedro Antunes, Director, National and Provincial Forecast. “While the benefits are most concentrated where natural gas is produced, growth brings gains in manufacturing, construction and services industries in all provinces.”

“The investments presented for Quebec should be considered highly speculative. A more positive outlook for development of Quebec’s shale gas is certainly possible, as is a continuation of the current situation with no drilling permitted.”

The upstream investments for Quebec reflect the potential in the province for shale gas development. Although there is currently a moratorium on shale gas drilling, the industry and government are working together to engage stakeholders to determine whether regulations can be crafted to allow development to proceed.

This is an image which represents the chart “Natural Gas Demand by Province” Overall, the Conference Board’s assumptions for Quebec investment are uncertain. The investments assume a ramp-up to 70 wells per year by 2020 that collectively would satisfy about half of Quebec’s natural gas requirements.

To date, only 10 wells have been drilled in Quebec to test the prospects of shale gas production. Only a couple of production tests are available from which to form judgments about future well performance. And there are no wells with a production history.

All provinces will benefit from the investment occurring across the country, with Ontario and Quebec receiving a greater share of supply-chain impacts. An important share of the investment in natural-gas-producing provinces will result in purchases of goods and services from other jurisdictions.

Natural gas investments will create roughly 199,000 person-years of employment in Quebec over the 24 year period. While only $11 billion (2012 dollars) of the direct investments will occur in Quebec, the province will see real GDP increase by a cumulative $17 billion.

In all, new investment and increased production will add $940 billion (2012 dollars) to Canada’s economy between 2012 and 2035. The industry is expected generate roughly 6.2 million person-years of employment. In other words, the industry is expected to support employment of nearly 260,000 per year over the 24-year forecast horizon.

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LNG World News Staff, December 18, 2012; Image: The Conference Board of Canada