Bloomberg News

Canadian Natural Gas Falls Most in 17 Months on U.S. Storage

October 05, 2011

Oct. 5 (Bloomberg) -- Canadian natural gas fell the most in more than 17 months on speculation a U.S. government report tomorrow will show stockpiles increased more than average last week, weakening demand for the power-plant fuel.

Prices, which usually follow their U.S. counterparts on the New York Mercantile Exchange, declined 4.1 percent as analysts expect the Energy Department to say stockpiles increased 99 billion cubic feet in the week ended Sept. 30, according to the median of 20 estimates compiled by Bloomberg. The five-year average gain for the week is 74 billion, department data show.

Alberta gas for November delivery fell 14 cents to C$3.27 per gigajoule ($2.98 per million Btu) as of 4:25 p.m. New York time. It was the largest drop since April 29, 2010. December gas dropped 13.75 cents to C$3.545, according to NGX, a Canadian Internet market. Gas traded on the exchange is shipped to users in Canada and the U.S. and is priced on TransCanada Corp.’s Alberta system.

“Last week’s injection was higher than expected, in the triple digits, and the expectations are for the next few injections to possibly be equally high,” Carl Neill, an energy consultant with Risk Management Inc. in Atlanta, said in a telephone interview. “When you see the increase in rig counts over the past few weeks with spot prices where they are, it’s pretty bearish.”

Gas for November delivery on the Nymex declined 6.8 cents to settle at $3.57 per million Btu.

Gas Flows

Gas at the Alliance Pipeline delivery point near Chicago gained 3.75 cents, or 1 percent, to $3.6905 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.

At the Kingsgate point on the border of Idaho and British Columbia, gas rose 3.7 cents, or 1.1 percent, to $3.4453, according to ICE.

At Malin, Oregon, where Canadian gas is traded for California markets, gas advanced 5.7 cents, or 1.6 percent to $3.5475 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet, 693 million above the target, as of 3:30 p.m. New York time.

Gas was flowing at a daily rate of 2.6 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.

Capacity Estimate

Available capacity on TransCanada’s British Columbia system at Kingsgate was 519 million cubic feet. The system was forecast to carry 1.57 billion cubic feet today, about 75 percent of its capacity of 2.09 billion.

Spectra Energy reported low linepack conditions on the Mainline North of the British Columbia system. Shippers were asked to lower accounts toward zero over the next few days because of an Alberta East capacity constraint on Oct. 11, the company said on its website.

Volume on the system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 2.78 billion cubic feet at 3:35 p.m.

--With assistance from Moming Zhou in New York. Editors: Bill Banker, Richard Stubbe

To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net

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


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