Bloomberg News

Canadian Natural Gas Falls as Mild Weather Adds to High Supplies

December 29, 2011

Dec. 28 (Bloomberg) -- Canadian natural gas fell as mild U.S. weather cut heating needs, adding to a glut of the fuel in storage.

Alberta gas sank 1.1 percent. Demand for heat across the U.S. will trail normal by 17 percent through Jan. 4, according to Belton, Missouri-based forecaster Weather Derivatives. Stockpiles of the fuel probably dropped 86 billion cubic feet last week, the median of four analyst estimates compiled by Bloomberg. The five-year average drop is 122 billion.

“Average onshore gas production has been running 5 billion to 6 billion cubic feet a day higher than year-ago levels,” said Stephen Smith, an analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. “This represents the sustainable downward pressure on gas.”

Alberta gas for January delivery fell 3 cents to C$2.65 a gigajoule ($2.46 per million British thermal units) at 10:25 a.m. New York time on 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. NGX Alberta gas has fallen 28 percent this year.

Gas for January delivery fell 3.2 cents, or 1 percent, to $3.08 per million Btu on the New York Mercantile Exchange.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.4 billion cubic feet, 495 million below its target.

Empress Flow

Gas was flowing at a daily rate of 2.87 billion cubic feet at Empress, Alberta. The fuel is transferred to TransCanada’s main line at Empress.

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 822 million cubic feet. The system was forecast to carry 1.83 billion cubic feet today, about 69 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 2.89 billion cubic feet at 9:05 a.m.

--Editors: David Marino, Charlotte Porter

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


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