Bloomberg News

Canadian Natural Gas Falls Amid Ample Storage, Increased Output

October 26, 2011

Oct. 26 (Bloomberg) -- Canadian natural gas for November fell as increased production of the fuel from shale gas formations bolsters inventories in the U.S., where most of Canada’s output is consumed.

Alberta gas fell 2.5 percent as analysts forecast that stockpiles of the fuel rose 87 billion cubic feet last week, the median of 18 estimates compiled by Bloomberg. Inventories grew an average 47 billion cubic feet in the same week during the past five years, according to Energy Department data.

“What’s preventing gas from going lower is the increased demand because of the weather,” said Kyle Cooper, director of research at IAF Advisors in Houston. “It’s not enough to slow down the bearish supply-demand situation.”

Alberta gas for November delivery fell 8 cents to C$3.17 per gigajoule ($3 per million British thermal units) as of 3:40 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 dropped 6.8 cents to settle at $3.59 per million Btu.

Gas for prompt delivery in the Midwest gained amid forecasts of colder-than-normal weather. Temperatures in Chicago will dip to 38 degrees Fahrenheit (3 Celsius) tomorrow, 4 degrees below normal, according to State College, Pennsylvania- based AccuWeather Inc.

Spot Prices

Spot gas at the Alliance delivery point near Chicago rose 12.96 cents, or 3.4 percent, to $3.9778 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 slipped 0.97 cents to $3.5066, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was up 2.47 cents to $3.6236 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, 74 million below the target.

Gas was flowing at a daily rate of 2.47 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 1.71 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 750 million cubic feet. The system was forecast to carry 1.83 billion cubic feet today, about 71 percent of its capacity of 2.58 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 2.87 billion cubic feet at 2:35 p.m.

--Editors: Charlotte Porter, Bill Banker

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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