Bloomberg News

Canadian Natural Gas Unchanged as U.S. Inventories Near Record

October 31, 2011

Oct. 31 (Bloomberg) -- Canadian natural gas for December was unchanged amid speculation that stores of the fuel in the U.S. will top last year’s record before the winter heating season begins, curbing demand for Canada’s exports.

U.S. inventories rose to 3.72 trillion cubic feet in the week ended Oct. 21, the Energy Department reported, closing on last year’s record 3.84 trillion the week ended Nov. 4. The number of rigs drilling for gas in the U.S. rose by seven to 934 last week, according to data published by Baker Hughes Inc.

“Storage levels are high,” James Williams, an energy economist at WTRG Economics, an energy research firm in London, Arkansas, said in a note today. “We expect storage to top out above last year’s record.”

Alberta gas for December delivery was unchanged at C$3.25 per gigajoule ($3.10 per million British thermal units) as of 3 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 December delivery on the New York Mercantile Exchange rose 1.1 cents to settle at $3.934 per million Btu.

Spot gas at the Alliance delivery point near Chicago fell 7.77 cents, or 2 percent, to $3.7758 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.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas rose 2.44 cents to $3.5031, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was up 8.89 cents to $3.6131 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.7 billion cubic feet, 171 million above the target.

Gas was flowing at a daily rate of 2.56 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 1.1 billion cubic feet. The system was forecast to carry 1.47 billion cubic feet today, about 57 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 2.83 billion cubic feet at 1:50 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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