Bloomberg News

Canadian Natural Gas Declines as Mild Weather Pares Furnace Use

January 31, 2012

Jan. 30 (Bloomberg) -- Canadian natural gas fell as mild weather across the U.S. pared demand for home-heating fuels.

Alberta gas declined 1.9 percent. Demand for heat across the U.S. will trail normal by 32 percent through Feb. 6, according to Belton, Missouri-based Weather Derivatives. Utilities and other big U.S. gas users have cut imports from Canada as domestic producers tap shale gas reserves.

“Canadian imports have been well below year-ago levels through mid-January and unusually mild weather since November has been a major factor,” said Stephen Smith, an energy analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi.

Alberta gas for March delivery fell 4.25 cents to C$2.22 a gigajoule ($2.09 per million British thermal units) at 1:25 p.m. New York time on NGX, a Canadian Internet market. NGX gas has tumbled 22 percent this month.

Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp.’s Alberta system.

Natural gas for March delivery on the New York Mercantile Exchange fell 4.3 cents, or 1.6 percent, to settle at $2.713 per million Btu. The futures have dropped 9.2 percent this month, the worst-performing commodity on the Standard & Poor’s GSCI Spot Index in 2012.

Gas for prompt delivery rebounded after declining Jan. 27 on lower weekend demand.

Spot Prices

Spot gas at the Alliance delivery point near Chicago gained 12.63 cents, or 4.7 percent, to $2.836 per million Btu on the Intercontinental Exchange. Alliance, an express line, can carry 1.5 billion cubic feet a day to the Midwest from western Canada.

At the Kingsgate point on the border of Idaho and British Columbia, gas jumped 17.9 cents, or 7.3 percent, to $2.6428, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was up 11.41 cents, or 4.4 percent, to $2.7235.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.3 billion cubic feet, 538 million below target.

Gas was flowing at a daily rate of 2.73 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 2.03 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 90 million cubic feet. The system was forecast to carry 1.93 billion cubic feet today, or 96 percent of its capacity of 2.02 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, 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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