Canadian Gas Rises on Drilling Drop, Outlook for Colder Weather
February 10, 2012, 3:07 AM ESTBy Colin McClelland
Feb. 9 (Bloomberg) -- Canadian natural gas gained on speculation that colder weather and lowered production outlooks will increase demand for the heating and power-plant fuel.
Gas rose 1.2 percent after BG Group, the U.K.’s third- largest oil company, cut a forecast today for U.S. shale-gas production in 2015 by 58 percent because of a 40 percent drop in prices over the past year. Chesapeake Energy Corp. said it has reduced production by more than the 500 million cubic feet it had previously announced, and reiterated plans to lower output by as much as 1 billion cubic feet a day.
New York’s high temperature Feb. 12 may be 30 degrees Fahrenheit (-1 Celsius), 11 lower than normal, according to AccuWeather Inc. of State College, Pennsylvania. The high in Chicago is forecast to be 23 on Feb. 11, 12 below normal.
“It’s a little bit colder, and that’s lending the market some support,” said Phil Flynn, vice president of research at PFGBest in Chicago. “But even if we go into an ice age, it’s not going to have a lasting impact on supply.”
Alberta gas for March delivery advanced 2.5 cents to C$2.07 a gigajoule ($1.97 per million British thermal units) at 4:15 p.m. New York time on NGX, a Canadian Internet market. April gas advanced 7 cents to $2.16. Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp.’s Alberta system.
New York Trading
Natural gas for March delivery on the New York Mercantile Exchange rose 2.9 cents to settle at $2.477 per million Btu.
Spot gas at the Alliance delivery point near Chicago gained 4.67 cents, or 1.8 percent, to $2.7063 per million Btu on the Intercontinental Exchange. Alliance, an express line, can carry 1.5 billion cubic feet a day to the U.S. Midwest from western Canada.
At the Kingsgate point on the border of Idaho and British Columbia, gas fell 1.39 cents, or 0.6 percent, to $2.4571. At Malin, Oregon, where Canadian gas is traded for California markets, gas declined 0.26 cent, or 0.1 percent, to $2.5951.
Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.7 billion cubic feet. Gas was flowing at a daily rate of 2.63 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 2.12 billion cubic feet.
Available capacity on TransCanada’s British Columbia system at Kingsgate was 547 million cubic feet. The system was forecast to carry 1.9 billion cubic feet today, or 78 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 2.98 billion cubic feet at 3:05 p.m.
--With assistance from Christine Buurma in New York and Eduard Gismatullin in London. Editors: Charlotte Porter, David Marino
To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
