Bloomberg News

Canadian Gas Declines as Mild Weather Boosts Stockpile Glut

February 14, 2012

Feb. 13 (Bloomberg) -- Canadian natural gas fell as mild weather across the U.S. added to a glut of the fuel in underground storage.

Alberta gas fell 2.9 percent. U.S. heating demand will trail normal by 14 percent through Feb. 20, said Belton, Missouri-based Weather Derivatives. Inventories stood at 2.89 trillion cubic feet as of Feb. 3, 33 percent above the five-year average, according to the Energy Department.

“The next two withdrawals will be pretty small in comparison to last year,” said Carl Neill, a consultant with Risk Management Inc. in Atlanta. “If the weather cools down in March we may be able to whittle down some of the surplus.”

Alberta gas for March delivery fell 6 cents to C$2.035 a gigajoule ($1.94 per million British thermal units) at 4:50 p.m. New York time on NGX, a Canadian Internet market. NGX gas has lost 29 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 4.6 cents, or 1.9 percent, to settle at $2.431 per million Btu.

Spot gas at the Alliance delivery point near Chicago dropped 10.2 cents, or 3.7 percent, to $2.6305 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.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas fell 4.22 cents, or 1.7 percent, to $2.4566. At Malin, Oregon, where Canadian gas is traded for California markets, gas declined 2.67 cents, or 1 percent, to $2.5624.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.8 billion cubic feet, 30 million above target.

Gas was flowing at a daily rate of 2.72 billion cubic feet at Empress, Alberta, where the fuel is transferred to TransCanada’s main line.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 2.16 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 667 million cubic feet. The system was forecast to carry 1.78 billion cubic feet today, or 73 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 2.94 billion cubic feet at 3:50 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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