Bloomberg News

Canada Natural Gas Rises on Potential Gulf of Mexico Storm

June 22, 2012

Canadian natural gas gained on speculation that a potential tropical storm in the Gulf of Mexico may disrupt U.S. production.

July gas in Alberta rose 1.5 percent as energy platforms in the Gulf began evacuations. A weather system off the Yucatan Peninsula threatened to grow into a tropical storm over the weekend. Gas rose yesterday after the U.S. reported a smaller- than-average inventory gain that helped cut a surplus for the 11th straight week.

“The scare there is always of tropical storms doing something significant,” said Kyle Cooper, director of research with IAF Advisors in Houston. “I think it’s a continuation of a bullish inventory number and expectations for next week are pretty low. We are going to whittle down the surplus.”

Alberta gas for July delivery increased 3 cents to C$1.9875 gigajoule ($1.83 per million British thermal units) as of 4:40 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 24 percent this year.

Natural gas for July delivery on the New York Mercantile Exchange advanced 4.3 cents, or 1.7 percent, to settle at $2.625 per million Btu.

U.S. inventories rose 62 billion cubic feet for the week ended June 15 to 3.006 trillion, below the five-year average gain of 87 billion for the week, according to the U.S. Energy Department. A surplus to the five-year average narrowed to 27 percent from a six-year high of 61 percent the end of March.

Hot Weather

Temperatures will be above normal across most of the lower 48 states from June 27 through July 6, according to the National Weather Service. The high in Dallas on June 25 will be 103 degrees Fahrenheit (39 Celsius), according to AccuWeather Inc. in State College, Pennsylvania.

Spot gas at the Alliance delivery point near Chicago rose 0.4 cent, or 0.2 percent, to $2.5303 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 declined 0.5 cent to $2.1947 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices fell 0.59 cent to $2.3028 per million Btu.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.6 billion cubic feet at 3 p.m. New York time.

Flow Rates

Gas was flowing at a daily rate of 1.87 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 1.84 billion cubic feet.

The available capacity on TransCanada’s British Columbia system at Kingsgate was 836 million cubic feet. The system was forecast to carry 1.78 billion cubic feet today, or 68 percent of normal capacity of 2.62 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 2.963 billion cubic feet at 3:05 p.m.

To contact the reporter on this story: Naureen S. Malik in New York at Nmalik28@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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