Bloomberg News

Canadian Natural Gas Falls on Speculation Inventories at Record

November 23, 2011

Nov. 22 (Bloomberg) -- Canadian natural gas fell as mild weather across the U.S. cut demand and helped stockpiles build.

Alberta gas declined 1 percent on speculation U.S. inventories of the fuel increased 21 billion cubic feet last week, the median of 10 analyst estimates compiled by Bloomberg. Stockpiles reached a record 3.85 trillion in the week ended Nov. 11. Demand for heat across the U.S. will trail normal by 31 percent through Nov. 29, according to Weather Derivatives.

“We don’t really have any impressive weather patterns coming our way,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.

Alberta gas for December fell 3.25 cents to C$3.12 per gigajoule ($2.86 per million British thermal units) as of 12:25 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 0.3 cent to $3.396 per million Btu as of 12:25 p.m. East Coast time.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was at 16 billion cubic feet, 532 million below its target.

Gas was flowing at a daily rate of 2.15 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 1.97 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.01 billion cubic feet. The system was forecast to carry 1.71 billion cubic feet today, about 63 percent of its capacity of 2.72 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 2.72 billion cubic feet at 11:20 a.m.

Spectra issued an operation flow order because of low volume after buyers took large amounts of gas off the Westcoast transmission system during colder-than-normal weather in the Pacific Northwest last week. The company warned that customers could face penalties if they take off more than contracted volume effective tomorrow.

--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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