Bloomberg News

Canada Natural Gas Slipped 30% This Year on Shale Gas Glut

December 30, 2011

Dec. 30 (Bloomberg) -- Canadian natural gas fell, bringing its annual decline to 30 percent, amid a continuing glut of the fuel caused by new supplies from shale gas formation and mild U.S. weather.

Alberta gas dropped a second day after the Energy Department said U.S. stockpiles of the fuel declined 81 billion cubic feet to 3.548 trillion in the week ended Dec. 23. The five-year average withdrawal is 122 billion. Demand for heat across the U.S. will trail normal by 14 percent through Jan. 6, according to Weather Derivatives of Belton, Missouri.

“We’re waiting for something to re-enter the market and balance things out on the demand side,” said Eric Bickel, a natural gas analyst with Summit Energy Services in Louisville, Kentucky. “Until we see some snow and cold, we’ll be in a low- price environment.”

Alberta gas for January delivery fell 2.75 cents, or 1.1 percent, to C$2.57 a gigajoule ($2.40 per million British thermal units) at 11:20 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.

Gas for February delivery declined 0.2 cent to $3.025 per million Btu at 11:23 a.m. on the New York Mercantile Exchange, brining its decline to 31 percent so far this year. The futures traded below $3 per million Btu earlier today for the first time in more than two years.

Gas Flows

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.8 billion cubic feet, 94 million below target.

Gas was flowing at a daily rate of 2.82 billion cubic feet at Empress, Alberta, at 11 a.m. in New York. 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 2.06 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 2.81 billion cubic feet at 10:05 a.m.

--Editors: Charlotte Porter, David Marino

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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