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Updated June 2020

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Highlights of 2019

Henry Hub: Compared with 2018, the primary price benchmark for U.S. natural gas decreased by 18 per cent in 2019, averaging US$2.57 per million British thermal units (MMBtu). The decline in Henry Hub price was largely associated with high levels of U.S. oil output, resulting in higher associated gas production. The price is expected to gradually increase over the remainder of the forecast period with growing demand and exports, but is not expected to reach the levels seen in 2008.

AECO-C: The price benchmark for western Canadian natural gas increased 8 per cent from 2018 to 2019, averaging Cdn$1.60 per gigajoule (GJ). Compared to U.S. natural gas benchmarks, western Canadian prices continue to be challenged by high production, transportation disruptions, and removal capacity constraints.

Price differential: The AECO-C and Henry Hub price differential narrowed in 2019 to US$1.29/MMBtu, down from US$1.95/MMBtu in 2018.

Table 1.2 shows the price of natural gas for both the Henry Hub and AECO-C over the past few years and over the forecast period.

Natural Gas Prices

Highlights for 2020 to 2029

Henry Hub: The Henry Hub price is projected to decrease to US$2.25/MMBtu in 2020 because of weakened demand associated with the coronavirus disease 2019 (COVID-19 pandemic). Although the COVID-19 pandemic has had significant repercussions on crude oil markets, natural gas prices have not faced as similar volatility. Over the forecast period, demand is anticipated to increase, driven primarily by U.S. liquefied natural gas (LNG) and pipeline exports. However, the price of Henry Hub will remain relatively low due to ample natural gas supplies, keeping the North American market in balance.

AECO-C: The AECO-C price is projected to gradually increase over the forecast period from an average of Cdn$1.92/GJ in 2020. Unlike historical trends, AECO-C prices are not expected to follow Henry Hub prices closely over the forecast. This disconnect is due to differing regional factors, including the timing of export capacity additions (such as the completion of pipeline expansions and LNG projects), demand from the oil sands and petrochemical facilities, and coal-to-gas conversions of power plants.

Price differential: The price differential between AECO-C and Henry Hub reflects transportation differentials, regional supply and demand balances, infrastructure constraints, and the U.S./Canadian dollar exchange rate.

As such, the AECO-C and Henry Hub price differential is anticipated to average about US$0.85/MMBtu over the forecast period until export constraints are alleviated and market conditions improve in western Canada.