Bloomberg News

Canadian Gas Declines as Mild Weather Forecast for U.S. Midwest

December 12, 2011

Dec. 12 (Bloomberg) -- Canadian natural gas fell amid forecasts of mild weather in the U.S. Midwest, the biggest consuming region for Canada’s gas output.

Alberta gas dropped 0.6 percent after AccuWeather Inc. predicted warmer-than-normal weather. Temperatures in Chicago will peak at 50 degrees Fahrenheit (10 Celsius) on Dec. 14, 15 degrees higher than normal, according to the State College, Pennsylvania-based forecaster.

“It’s all about the weather and there really is none,” said Carl Neill, a consultant with Risk Management Inc. in Atlanta. “We came into the season with record storage and have only used 21 billion cubic feet of it so far.”

Alberta gas for January delivery fell 1.75 cents to C$2.9425 a gigajoule ($2.72 per million British thermal units) as of 3:20 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 6.3 cents, or 1.9 percent, to settle at $3.254 per million Btu on the New York Mercantile Exchange.

Spot gas at the Alliance delivery point near Chicago tumbled 19.7 cents, or 5.7 percent, to $3.2374 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.

West Prices Gain

Gas for prompt delivery at points in the U.S. Northwest rose amid forecasts of colder weather in the region. The low in Portland, Oregon, may reach 24 degrees Fahrenheit overnight, 11 below normal, AccuWeather said.

At the Kingsgate point on the border of Idaho and British Columbia, gas rose 4.71 cents, or 1.4 percent, to $3.3832, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was up 7.03 cents, or 2 percent, to $3.5367 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 17.1 billion cubic feet, 214 million above its target.

Gas was flowing at a daily rate of 2.71 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 2.11 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 334 million cubic feet. The system was forecast to carry 2.32 billion cubic feet today, about 87 percent of its capacity of 2.65 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 2:35 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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