CALGARY, Alberta (Reuters) - Canada's embattled energy trust sector is searching for salvation in grim times, hoping that consolidation will allow it to cope with pending tax changes and a bear market for energy trust units.

The trusts have been battered by weak investor interest, poor natural gas prices, higher costs and lingering fallout from the federal government's decision last year to strip away their tax-free status in 2011.

The response to those challenges is to get bigger and get bigger fast as the premier companies in the sector bulk up with acquisitions.

"We're seeing guys prepare themselves for the different environment," said Cristina Lopez, an analyst at Tristone Capital. "We're in for a more frenzied merger and acquisition market."

There have already been some recent big deals among the trusts. On Monday, Enerplus Resources Fund, the number three energy trust, said it will acquire Focus Energy Trust for C$1.2 billion. In October, Penn West Energy Trust , the number two, offered C$3.6 billion for high-flying rival Canetic Resources Trust.

The purchases bring new production and reserves, expand the companies' geographical reach, and offer key tax pools that can be used to shelter income once they become taxable.

Those are key considerations for firms in the sector. With drilling costs on the rise, buying a rival's reserves is often more cost effective than exploring for oil and gas.

"It can be cheaper to find oil on Bay Street than to (drill) for it," said Glenn MacNeill, chief investment officer at Sentry Select Capital Management. "It's less risky and it takes less time."

Energy trusts have been exempt from paying corporate taxes as long as the majority of their cash gets distributed to unitholders. But with the end of that break in sight, they are attempting to acquire rivals that have attractive tax losses.