Bloomberg News

Canadian Natural Gas Declines as Supply Glut Bloats Inventories

April 13, 2012

Canadian natural gas fell, extending its drop this week to 9.7 percent, as rising production boosted stockpiles of the fuel.

Alberta gas declined 2.3 percent. Stockpiles in the U.S. were 2.487 trillion cubic feet as of April 6, 59 percent above the five-year average, according to the Energy Department (DOENUST5). Total marketed gas production in the U.S. will increase 4.5 percent this year, the department said.

“The market is sending a message to throttle back on output,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York.

Alberta gas for May delivery dropped 3.5 cents to C$1.47 a gigajoule ($1.39 per million British thermal units) as of 2:55 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. NGX gas is down 49 percent this year.

Natural gas for May delivery on the New York Mercantile Exchange fell 0.2 cent to settle at a 10-year low of $1.981 per million Btu.

Spot gas at the Alliance delivery point near Chicago declined 6.77 cents, or 3.5 percent, to $1.8742 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

At the Kingsgate point on the border of Idaho and British Columbia, gas slid 6.31 cents, or 3.5 percent, to $1.7364 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices dropped 5.92 cents, or 3.2 percent, to $1.814.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.7 billion cubic feet, 116 million below target.

Gas was flowing at a daily rate of 2.13 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 1.06 billion cubic feet. The system was forecast to carry 1.6 billion cubic feet today, or 60 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 3.01 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: Dan Stets at dstets@bloomberg.net


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