Bloomberg News

Canadian Natural Gas Falls on Larger-Than-Average U.S. Storage

October 06, 2011

Oct. 6 (Bloomberg) -- Canadian natural gas fell as a U.S. government report showed stockpiles increased more than average last week, weakening demand for the power-plant fuel.

Prices declined 1.1 percent after the Energy Department said gas stockpiles rose 97 billion cubic feet in the week ended Sept. 30 to 3.409 trillion cubic feet. The five-year average change for the week is an increase of 74 billion, department data show. Analyst estimates compiled by Bloomberg showed an expected gain of 98 billion.

Alberta gas for November delivery fell 3.75 cents to C$3.24 per gigajoule ($2.95 per million Btu) as of 3:05 p.m. New York time, according to NGX, a Canadian Internet market. December gas dropped 5.5 cents to C$3.485. Gas traded on the exchange is shipped to users in Canada and the U.S. and is priced on TransCanada Corp.’s Alberta system.

“When you step back, it was still 97 bcf put into storage when typically we put in about 70 to 75 bcf at this time of year,” Cameron Horwitz, an analyst in Houston at Canaccord Genuity, said in a telephone interview. “There’re still very robust injections and that’s a reflection of what continues to be an oversupply condition in this market.”

Gas for November delivery on the New York Mercantile Exchange rose 2.8 cents to settle at $3.598 per million Btu.

Gas Prices

Gas at the Alliance Pipeline delivery point near Chicago dropped 24.49 cents, or 6.6 percent, to $3.4456 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 fell 14.73 cents, or 4.3 percent, to $3.298, according to ICE.

At Malin, Oregon, where Canadian gas is traded for California markets, gas declined 16.01 cents, or 4.5 percent, to $3.3874 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.6 billion cubic feet, 834 million above the target, as of 3 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.

Gas Flows

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 1.93 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 583 million cubic feet. The system was forecast to carry 1.51 billion cubic feet today, about 72 percent of its capacity of 2.09 billion.

Volume on Spectra Energy’s system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 2.79 billion cubic feet at 2:05 p.m.

Spectra 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.

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

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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