Bloomberg News

Canadian Natural Gas Falls Amid Higher-Than-Normal Stockpiles

February 02, 2012

Feb. 1 (Bloomberg) -- Canadian natural gas fell amid speculation that U.S. inventories of the fuel decreased less than seasonal averages last week.

Alberta gas dropped 6.1 percent. Stockpiles probably declined 129 billion cubic feet last week, the median of 17 analyst estimates compiled by Bloomberg. The five-year average decline is 186 billion cubic feet, according to the Energy Department, which is scheduled to release its weekly survey of gas in storage at 10:30 a.m. tomorrow in Washington.

“The market is saying you’re going to have to drive prices low enough to get some demand,” said Kyle Cooper, director of research at IAF Advisors in Houston.

Alberta gas for March delivery fell 12.75 cents to C$1.96 a gigajoule ($1.86 per million British thermal units) at 3:50 p.m. New York time on NGX, a Canadian Internet market. NGX gas has dropped 32 percent this year.

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 12.1 cents, or 4.8 percent, to settle at $2.382 per million Btu.

Spot gas at the Alliance delivery point near Chicago dropped 15.34 cents, or 4.8 percent, to $2.4647 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.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas tumbled 10.06 cents, or 4.1 percent, to $2.3454, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 7.9 cents, or 3.1 percent, to $2.4659.

Prices probably won’t stay at current low levels, Suncor Energy Inc. President Steve Williams said in a conference call in Calgary today. The fuel will probably return to $5 to $6 per million Btu, he said, without giving a time estimate.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.6 billion cubic feet, 187 million below target.

Gas was flowing at a daily rate of 2.68 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 705 million cubic feet. The system was forecast to carry 1.74 billion cubic feet today, or 71 percent of its capacity of 2.44 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 2.95 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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