Bloomberg News

Canadian Natural Gas Advances as Low Prices Spark Buyer Interest

March 30, 2012

Canadian natural gas for May delivery rose as prices at the lowest in more than a decade boosted buying from utilities and other big users.

Alberta gas rose 1.2 percent after touching the lowest level in 12 years yesterday. The U.S. Energy Department reported stockpiles of the fuel were 59 percent above the five-year average in the week ended March 23.

“The market has had a big breakdown,” said Carl Neill, a consultant with Risk Management Inc. in Atlanta. “We’re starting to get some buyer interest.”

Alberta gas for May delivery advanced 2 cents to C$1.68 a gigajoule ($1.59 per million British thermal units) as of 3:40 p.m. New York time on NGX, a Canadian Internet market. April gas slipped 1 cent to C$1.61 a gigajoule. It has declined 11 percent this week.

Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp. (TRP)’s Alberta system. NGX gas is down 41 percent this year.

Natural gas for May delivery on the New York Mercantile Exchange fell 2.3 cents to settle at $2.126 per million Btu. Nymex gas has dropped 29 percent this year.

Canadian gas for prompt delivery in the Midwest tumbled amid milder-than-normal weather across the U.S. and lower weekend industrial needs. U.S. heating demand will trail normal by 27 percent through April 6, according to Belton, Missouri- based forecaster Weather Derivatives.

Spot Prices

Spot gas at the Alliance delivery point near Chicago tumbled 10.22 cents, or 5 percent, to $1.9316 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.

Spot prices in the Northwest gained amid forecasts of colder-than-normal weather. Portland, Oregon, may have a low of 38 degrees Fahrenheit (3 Celsius) tomorrow, 4 below normal, according to AccuWeather Inc.

At the Kingsgate point on the border of Idaho and British Columbia, gas rose 6.19 cents, or 3.3 percent, to $1.9195 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, gas gained 4.79 cents, or 2.5 percent, to $1.9672.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.9 billion cubic feet, 93 million above target.

Gas Flows

Gas was flowing at a daily rate of 1.88 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 2.2 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1 billion cubic feet. The system was forecast to carry 1.65 billion cubic feet today, or 62 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 3.08 billion cubic feet at 1:50 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: Bill Banker at bbanker@bloomberg.net


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