Bloomberg News

Canadian Natural Gas Declines as U.S. Drilling Boosts Supplies

September 28, 2011

Sept. 28 (Bloomberg) -- Canadian natural gas fell as drilling in the U.S., the biggest consumer of the nation’s gas output, increased supplies of the fuel.

There were 912 rigs drilling for gas in the U.S. last week, 46 more than this year’s low of 866 in the week ended May 20, according to data compiled by Baker Hughes Inc. New York gas futures have dropped 11 percent since then.

“The bearish rig counts have been keeping the market down,” said Carl Neill, an energy consultant with Risk Management Inc. in Atlanta.

Alberta gas for October delivery fell 5.5 cents to C$3.44 per gigajoule ($3.17 per million Btu) as of 2:50 p.m. New York time, according to NGX, a Canadian Internet market. November gas was down 4.25 cents to C$3.50 per gigajoule. Gas traded on the exchange is shipped to users in Canada and the U.S. and is priced on TransCanada Corp.’s Alberta system.

Gas for October delivery on the New York Mercantile Exchange fell 6.8 cents, or 1.8 percent, to settle at $3.759 per million Btu. The October contract expired at the end of floor trading today. November gas was down 7.6 cents to $3.799 per million Btu.

Gas at the Alliance Pipeline delivery point near Chicago fell 8.09 cents, or 2 percent, to $3.9046 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry about 1.5 billion cubic feet a day to the Midwest from western Canada.

Regional Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas was down 0.97 cent to $3.8008, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas fell 2.98 cents to $3.847 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 15.7 billion cubic feet, 96 million below the target.

Gas was flowing at a daily rate of 2.73 billion cubic feet at Empress, Alberta, where the fuel is transferred to TransCanada’s main line.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 1.96 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 374 million cubic feet. The system was forecast to carry 1.5 billion cubic feet today, about 80 percent of its capacity of 1.88 billion.

The volume on Spectra Energy’s British Columbia system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 2.83 billion cubic feet at 1:20 p.m.

--Editors: Charlotte Porter, Richard Stubbe

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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