Bloomberg News

Canada Natural Gas Falls as Ample Supplies Temper Weather Demand

October 21, 2011

Oct. 21 (Bloomberg) -- Canadian natural gas fell as ample supplies and higher U.S. production offset increased furnace use brought on by lower-than-normal temperatures, reducing demand for the nation’s gas exports.

Alberta gas fell 0.5 percent after the Energy Department reported U.S. stockpiles rose 103 billion cubic feet last week, above the five-year average gain of 58 billion. The number of rigs drilling for gas in the U.S. reached a high for the year of 936 as of Oct. 14 before falling by nine this week, the most this year, according to data compiled by Baker Hughes Inc.

“The rig count and production are high and there is no real weather demand yet,” said Carl Neill, an energy consultant with Risk Management Inc. in Atlanta. “There’s just no underlying strength in the market.”

Alberta gas for November delivery fell 1.5 cents to C$3.185 per gigajoule ($2.99 per million British thermal units) as of 3:20 p.m. New York time, 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.

Gas for November delivery on the New York Mercantile Exchange fell 0.1 cent to settle at $3.629 per million Btu. The futures are down 2 percent this week.

Spot Prices

Spot gas at the Alliance delivery point near Chicago fell 10.2 cents, or 2.7 percent, to $3.6992 per million Btu on the Intercontinental Exchange. Gas at the hub gained 5.4 percent this week. 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 dropped 10.49 cents, or 3.1 percent, to $3.3052, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 8.5 cents to $3.4007 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 15.9 billion cubic feet, 637 million below the target.

Gas was flowing at a daily rate of 2.62 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 1.79 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.34 billion cubic feet. The system was forecast to carry 1.42 billion cubic feet today, about 51 percent of its capacity of 2.76 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 2.93 billion cubic feet at 2:20 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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