Canada Natural Gas Falls as U.S. Storage Gain Exceeds Estimates

2011-5-20

Canadian natural gas fell after the U.S. Energy Department reported an increase in inventories last week that was higher than analysts expected.

Stockpiles of the fuel in the U.S. rose 92 billion cubic feet to 1.919 trillion in the week ended May 13, the department said. Analyst estimates compiled by Bloomberg called for an increase of 90 billion. New supplies of gas from shale formations in Canada and the U.S. have crimped price gains.

“We don’t see prices increasing simply because of the supply situation,” said Darcy Johnson, a market analyst at Canada’s National Energy Board, during a briefing today in Calgary. Prices in the coming months for natural gas probably will average between $4 and $5, the NEB estimates.

Alberta gas for June delivery dropped 11 cents, or 3.1 percent, to C$3.48 per gigajoule ($3.40 per million British thermal units) as of 2:30 p.m. New York time, according to NGX, a Canadian Internet market. Gas traded on the exchange goes to users in Canada and the U.S. and is priced on TransCanada Corp.’s Alberta system.

Natural gas for June delivery on the New York Mercantile Exchange fell 10.4 cents to $4.094 per million Btu.

Gas at the Alliance Pipeline delivery point near Chicago fell 7.52 cents to $4.2215 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry 1.5 billion cubic feet a day to the Midwest from western Canada.

Flow Rates
At the Kingsgate point on the border of Idaho and British Columbia, gas slipped 4.89 cents to $3.9699 per million Btu, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 4.04 cents to $4.0967.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.3 billion cubic feet as of 1:30 p.m. in New York, 168 million above its target level. Some Alberta producers have been forced to shut gas wells because of forest fires in the northern portion of the province.

Gas was flowing at a daily rate of 2.76 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 1.64 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 537 million cubic feet. The system was forecast to carry 1.44 billion cubic feet today, about 73 percent of its capacity of 1.98 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 billion cubic feet at 1:20 p.m.

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