Bloomberg News

Canadian Natural Gas Gains as Inventory Surplus Expected to Fall

April 16, 2012

Canadian natural gas rose for the first time in almost two weeks amid speculation of a lower-than- normal gain in U.S. inventories that would shrink a surplus of the fuel in storage.

Alberta gas gained 2.7 percent. U.S. inventories rose 8 billion cubic feet in the week ended April 6 to 2.487 trillion, or 59 percent above the five-year average for the week, the Energy Department (DOENUST5) said. The surplus narrowed from 61 percent the previous week, the biggest gap since April 2006.

“The storage surplus has probably peaked,” said Kyle Cooper, director of research at IAF Advisors in Houston. “It looks like from here it will probably decrease.”

Alberta gas for May delivery rose 4 cents to C$1.5075 a gigajoule ($1.43 per million British thermal units) as of 2:50 p.m. New York time on NGX, a Canadian Internet market. It was the first gain on NGX since April 3.

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 47 percent this year.

Natural gas for May delivery on the New York Mercantile Exchange rose 3.5 cents, or 1.8 percent, to settle at $2.016 per million Btu.

Spot gas at the Alliance delivery point near Chicago jumped 17.75 cents, or 9.5 percent, to $2.0517 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 rose 1.43 cents to $1.7507 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices slipped 0.5 cent to $1.809.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16 billion cubic feet, 776 million below target.

Gas was flowing at a daily rate of 2.11 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 2.13 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.09 billion cubic feet. The system was forecast to carry 1.56 billion cubic feet today, or 59 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 3.11 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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