The hits just keep on coming for Canada's energy industry.
Overshadowed by the meltdown in global oil markets, free falling natural gas prices are the latest trial for the country's beleaguered energy companies.
Canadian natural gas prices are now down by half since the start of the year, a slide that's accelerated in recent weeks as the effects of one of the warmest winters on record begin to crystallize for the sector.
"We're seeing natural gas prices get pressured to lows that we haven't seen in 17 to 18 years," said Martin King, a commodities expert at FirstEnergy Capital in Calgary. "It's a wake up call for some portions of the industry. I don't think a lot of people were thinking we'd be going back to 1990s-style gas pricing."
Benchmark Canadian gas prices, known as AECO, are now trading below $1.30 per million cubic feet and could have further to fall.
The culprit? Warm winter weather that's cratered demand and sent storage levels in Alberta to record highs.
Typically, the ebb and flow of natural gas markets sees supplies drawn down in the winter, which clears space in storage facilities that are then replenished during the summer injection season.
This year, mild weather across much of North America is upsetting that seasonal rhythm. Tepid demand for natural gas means storage levels in Alberta, for instance, could end up close to where they started the heating season.
The knock on effects of essentially skipping a winter heating season could, according to King, see prices bottoming out below $1, a level not seen since 1995.
A combination of full storage, relatively robust supply and soft demand is similar to the conditions gas prices faced in 2012. Then, the industry was able to avoid a worst-case scenario for prices as low natural gas costs enticed power generators to switch from coal to gas which helped to soak up supply.
This time around producers are hoping power demand will once again rescue prices. On the supply side of the equation, natural gas players are also hoping an industry-wide pullback in drilling will temper supplies enough to keep prices at least somewhat buoyant.
On that score, today's lower oil prices could actually be a friend to natural gas. When oil was still trading at $100 a barrel, natural gas producers were encouraged to keep drilling for so-called liquids rich gas. With oil now around $35 a barrel, the premium that gas used to fetch — and the incentive it offered producers to keep drilling — no longer exists.
"We're seeing massive capital cuts, we're seeing gas rigs being laid down all over the place, so the supply response is much more dramatic than it was in 2012," said Darren Gee, chief executive of Peyto Exploration and Development.
The lack of activity in basins around Canada and the US are showing up in rig count numbers that are a fraction of what they were a year ago.
The possibility that North American producers will pull in their horns enough to allow the market to come back into balance means prices could avoid falling to multi-decade lows. Whether that happens will become clearer in the next few months as demand from the power sector and the the supply response from producers begins to take shape.
Regardless of exactly how the situation plays out, though, the industry already knows it needs to buckle up for a year that looks even rougher now than it did just a few months ago.
"We had to tough it out through a very bad commodity price [in the summer of 2012] and we're probably looking at doing the same thing this year," said Gee.