Sun Media of the edomonton.com website is reporting that the high value of the Canadian dollar is only exacerbating problems in an industry beleaguered by stagnant natural gas prices and by changes imposed by the royalty review, industry watchers said yesterday.
As government officials fret and watch the chunk they get from the oilpatch get smaller thanks to the new-found strength of the Canadian dollar, the tribulations of a strong dollar are only the latest in a series of problems besieging the natural gas sector, said DeltaOne Capital analyst Peter Linder.
"This is going to have a very negative effect, particularly on the natural gas sector," said Linder of the high-flying Canadian dollar.
Alberta Premier Ed Stelmach recently warned that the strength of the Canadian currency was eating away at the province's take from natural gas.
The government's concern surrounds the fact that natural gas prices have remained stagnant and, thanks to the high dollar, Albertans are getting less cash today than they were for the same amount of the resource six months ago.
When gas sold for $7 US per gigajoule and the dollar was at 70 or 80 cents, the exchange rate meant Albertans got close to $9 Cdn per unit.
When the same unit now sells for the same price, thanks to the exchange rate, Albertans are getting just over $6 Cdn, which translates into millions in losses.
"We've had flat gas rates for the last five or six months, while the loonie has gone up 20%," said Linder.
"Companies have already cut back in drilling and exploration because of the price of natural gas.
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