Bloomberg News

Canadian Natural Gas Gains as Power Generators Switch Fuels

March 02, 2012

Canadian natural gas rose as low prices encouraged power producers to use more of the fuel.

Alberta gas for April delivery gained 1.5 cents after falling 37 percent this year, making it more competitive with coal for generating electricity. Nuclear output slipped to a four-month low yesterday, raising demand for other fuels.

“If gas stays down it’s going to start displacing some coal,” said Gordy Elliott, a risk-management specialist at INTL FCStone in St. Louis Park, Minnesota.

Alberta gas for April delivery was at C$1.81 a gigajoule ($1.74 per million British thermal units) as of 5 p.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. (TRP)’s Alberta system.

Natural gas for April delivery on the New York Mercantile Exchange rose 2.1 cents to settle at $2.484 per million Btu.

Spot gas at the Alliance delivery point near Chicago fell 4.59 cents to $2.4942 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry 1.5 billion cubic feet a day from western Canada.

At the Kingsgate point on the border of Idaho and British Columbia, gas dropped 6.58 cents, or 2.9 percent, to $2.2145. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 14.08 cents, or 5.8 percent, at $2.2855.

Alberta System

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.3 billion cubic feet, 496 million below target.

Gas was flowing at a daily rate of 2.62 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 484 million cubic feet. The system was forecast to carry 2.17 billion cubic feet today, or 87 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 3.02 billion cubic feet at 3.20 p.m.

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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