Canada’s Energy Future 2026 – Natural Gas Model

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What does the model do and how does it work?

The Natural Gas model estimates the production of natural gas in Canada. It relies on oil and natural gas price assumptions, LNG export assumptions, crude oil production estimated from the oil supply module, and other factors like technological change and policies. The Natural Gas model is developed by CER staff.

Canadian natural gas production contains conventional, tight, shale, solution, and coalbed natural gas from western Canada and conventional natural gas production from onshore New Brunswick, Ontario, and northern Canada. The module starts with detailed data on existing wells. Future projection is determined by declines in existing wells, as well as investment in future production. Future production investments are a function of profitability in the sector (which is heavily influenced by a given scenario’s natural gas price assumptions), the level of LNG exports, well economics, and projected changes to the production profiles of future wells.

Figure NG.1: Natural gas model overview

Source and Text Alternative

Source: CER

Text Alternative: The infographic displays a simplified explanation of the model used to determine total Canadian natural production for each year of the projection. The model components include:

• Natural gas production from new wells in western Canada, including total revenue and well characteristics (like depth and age).
• Natural gas production from old wells in western Canada by groupings, factoring in all wells and the decline rates of those wells..
• Production trends from the rest of Canada, including the Northwest Territories, New Brunswick, and Ontario.

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What level of detail does the model cover?

• Natural gas types: conventional, tight, shale, solution, and coalbed natural gas production.
• Timestep: Western Canada production is modeled monthly. Natural gas production from other regions is modeled annually.
• Facility detail: The western Canada natural gas production projections are based on detailed well data, which are grouped geographically into sub-areas from northeast B.C. (4 areas), Alberta (12 areas), and Saskatchewan (3 areas).
• LNG linkages: We make assumptions related to LNG project fuel use on a facility-by-facility basis. Facilities that are powered by natural gas use a portion of the gas delivered for facility operations. Electrified LNG facilities are assumed to be connected to the BC electrical grid and do not to use any natural gas for operations. For more information, see the Scenarios and Assumptions chapter in Canada’s Energy Future 2026, and the textbox in the Scenario Results Chapter “LNG exports as a key driver of natural gas production growth” for more information.

What are the key inputs and outputs of the model?

Table NG.1: Key inputs to the Natural Gas model

Key inputs to the Natural Gas model

Input	Source and description Values in bold refer to an input that comes from another section of the Energy Futures Modeling System (Figure MS.1).
Natural gas prices	Natural gas prices are a key driver of production because they determine how much revenue producers will receive from producing natural gas. Natural gas price assumptions are consistent with each scenario’s Assumptions. Values are adjusted with exchange rate and inflation values based on the Macroeconomic model.
LNG exports	LNG export volumes are consistent with each scenario’s Assumptions. For our projections, we assume 75% of gas that goes to LNG exports is dedicated production that only exists because of the LNG export volumes we assume in each scenario (See the textbox “LNG exports as a key driver of natural gas production growth” in Canada’s Energy Future 2026 for more information).
Technology characteristics	Technology characteristics, such as costs and efficiency, are Assumptions. The values are based on various publicly available sources and can vary by scenario.
Policies	Canadian climate and energy policies are Assumptions. These can vary by scenario (See Appendix 1 in Canada’s Energy Future 2026 for details).
Historical well data and production statistics	Detailed well data comes from Divestco, and the model also relies on provincial production statistics.

Table NG.2: Key outputs from the Natural Gas model

Key outputs from the Natural Gas model

Output	Description and linkages with other models in the Energy Futures Modeling System Values in bold refer to an output that is a key input to another model in the Energy Futures Modeling System.
Natural gas production	Natural gas production by region and type, as published in the natural gas production tables in the Canada’s Energy Future dataset, come from the Natural Gas model. Natural gas production is a key input into the Natural Gas Liquids model for determining NGL production levels. The Energy Demand and Emissions model uses natural gas production to project energy use and emissions for the oil and gas sector. Natural gas production also informs growth trends for each scenario’s Macroeconomic model.
Natural gas drilling	The number of natural gas wells drilled each year, by type, region, and scenario, comes from the Natural Gas model. This data is available in the natural gas drilling tables in the Canada’s Energy Future dataset.

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