North America: Tougher times ahead

Despite increased exploration, North American gas output is in decline, and US prices are high and volatile. The majors are focusing their attentions elsewhere and the industry is calling on the government to remove obstacles blocking exploration in environmentally sensitive regions, writes WJ Simpson

THE US is well into its third year of shrinking domestic natural gas output, Canada is heading down the same path and there is no prospect of early relief, despite record drilling and the highest prices in the industrialised world. The ingredients are not unlike those of early 2001, when supply side tightness generated high prices, forcing industrial consumers either to cut back or switch from gas and, by some estimates, costing 200,000 manufacturing jobs in the US. Emerging trouble sources A new discussion paper on the North American gas market released by the Canadian Gas Association (CGA) pinpoints the emerging trouble sources, noting the loss of production from the US Midcontinent, Gulf