I like this:

OTTAWA -- Profits in Canada's natural gas industry will more than double in 2010, the Conference Board of Canada said Monday.

The board expects drilling activity to remain sluggish as Canada digs out from the recession, but a rebound in prices, which fell as low as $3 Canadian per thousand cubic feet last summer, will more than offset falling production.

Profits in the industry -- in which Canada is the world's third largest producer -- are expected to total $5.9-billion in 2010, up from $2-billion in 2009, the board said in its outlook.

"High inventory levels will dampen the effects of any rebound in North American demand on prices," it said. "In turn, low prices will keep drilling weak throughout the year.

"As a result, total marketable natural gas production will fall 2% in 2010, after tumbling 8.3% in 2009," and is expected to total about 142 billion cubic metres of gas, the board said.

The board's outlook, published in its winter outlook for the gas extraction in industry, comes as Canadian natural gas prices tumble to four-month lows and North American inventory levels remain stubbornly high.

First Energy Capital reported on Friday that storage activity in Western Canada indicates another record high for February.

"Price implications are becoming increasingly negative for the remainder of the year," it added.

Prices in Canada have plunged about 36% in the past three months, and are currently at $3.60 per thousand cubic feet at Alberta's AECO storage hub. The board forecasts prices will average $5.44 in 2010.

Prices on Monday for gas traded on the New York Mercantile Exchange were threatening to fall through US$4 as high supply levels weigh on the market while mild weather limits demand. Canadian prices tend to follow the American market, as Canada exports 60% of its output, mostly to the U.S.

Looking ahead however, the board said, "Recovery in the U.S. and Canadian economies is already under way and the improved industrial activity will result in stronger demand for natural gas, putting upward pressure on prices."

Highly touted unconventional production plays will not be sufficient to offset losses from traditional drilling methods, placing total output 18.5% lower by 2014, the final year of the board's forecast, than it was at the start of the decade.

EnCana is Canada's largest producer, generating $32-billion in revenues in 2008, followed by Devon Canada ($3.8-billion), Keyera Facilities ($2.1-billion), Enerplus Resources Fund ($1.9-billion), AltaGas Income Trust ($1.8-billion) and Apache Canada ($1.7-billion).

Canwest News Service

TABLE -- Top Canadian natural gas companies

Company/Revenues in millions of dollars in 2008

EnCana/$32,078

ConoccoPhillips Canada/$5,018

Devon Canada/$3,797

Keyera facilities/$2,175

Enerplus/$1,977

Altagas/$1,814

Apache Canada/$1,760

Source:Conference Board of Canada

Read more: http://www.financialpost.com/news-sectors/energy/story.html?id=2711841%23ixzz0jEMIBZtr