Bloomberg News

Canadian Gas Declines on Mild Weather Outlook, Ample Supplies

December 09, 2011

Dec. 9 (Bloomberg) -- Canadian natural gas fell amid forecasts of mild weather across the U.S., the biggest consumer of the nation’s gas output, and above-normal supplies of the fuel in storage.

Alberta gas fell 3.7 percent after companies including Weather Derivatives predicted warmer-than-normal weather. Heating demand across the U.S. will trail normal by 18 percent, the Belton, Missouri-based forecaster said. The Energy Department said yesterday that stockpiles of the fuel were 8.7 percent above the five-year average last week.

“The forecasts appear quite warm for the eastern U.S.,” said Gordy Elliott, a risk-management specialist at INTL FC Stone LLC in St. Louis Park, Minnesota. “We’re going to have a lot of gas around for quite some time.”

Alberta gas for January delivery fell 11.25 cents to C$2.97 per gigajoule ($2.77 per million British thermal units) as of 3:50 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 January delivery tumbled 14 cents to settle at $3.317 per million Btu on the New York Mercantile Exchange. The futures lost 7.4 percent this week.

Spot gas at the Alliance delivery point near Chicago tumbled 19.8 cents, or 5.5 percent, to $3.4344 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.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas fell 9.69 cents, or 2.8 percent, to $3.3361, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 4.78 cents to $3.4664 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.8 billion cubic feet, 16 million above its target.

Gas was flowing at a daily rate of 2.89 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 1.97 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 857 million cubic feet. The system was forecast to carry 1.87 billion cubic feet today, about 68 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 2.9 billion cubic feet at 3:05 p.m.

--Editors: Bill Banker, 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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