Bloomberg News

Canada Natural Gas Declines on Mild Weather, Near-Record Storage

November 07, 2011

Nov. 7 (Bloomberg) -- Canadian natural gas fell amid forecasts of mild temperatures across the U.S., where most of Canada’s production is sold, and stockpiles that are approaching last year’s record.

Alberta gas fell 2.3 percent as forecasters including Weather Derivatives predicted above-average temperatures. Demand for heat across the U.S. will trail normal by 12 percent through Nov. 14, the Belton, Missouri-based forecaster said. Inventories stood at 3.794 trillion cubic feet as of Oct. 28, 46 billion below last year’s Nov. 5 record.

“We should have about the same peak storage as last year,” said Stephen Smith, an analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. “The maximum November storage peak won’t test current storage capacity,” leaving room for even more reserves, he said.

Alberta gas for December tumbled 7.75 cents to C$3.365 per gigajoule ($3.16 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 priced on TransCanada Corp.’s Alberta system.

Gas for December delivery on the New York Mercantile Exchange fell 8.7 cents, or 2.3 percent, to settle at $3.696 per million Btu.

Spot Prices

Spot gas at the Alliance delivery point near Chicago fell 8.34 cents, or 2.3 percent, to $3.5577 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry 1.5 billion cubic feet a day to the Midwest from western Canada. Prices dropped 5.5 percent at Alliance last week.

At the Kingsgate point on the border of Idaho and British Columbia, gas fell 2.44 cents to $3.5541, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 4.06 cents to $3.6257 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was at 16.2 billion cubic feet, 370 million below its target.

Gas was flowing at a daily rate of 1.98 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.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.07 billion cubic feet. The system was forecast to carry 1.52 billion cubic feet today, about 59 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 2.98 billion cubic feet at 1:50 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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