Canadian Natural Gas Falls as Higher U.S. Output Pares Imports

Canadian natural gas fell amid speculation higher U.S. production will allow utilities and other big users to refill storage before the winter heating season begins. Inventories rose 55 billion cubic feet, or 1.9 percent, to 2.961 trillion in the week ended Aug. 26, the Energy Department said today. Storage had been expected to rise 60 billion cubic feet, the average of estimates in a Bloomberg survey. Stockpiles trail the five-year average by 60 billion cubic feet.

“We’re coming off a high drilling cycle,” said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas. Much of the new gas drilling is in shale formations, where fewer wells are drilled and production is higher, he said.

Alberta gas for October slipped 2.5 cents to C$3.595 per gigajoule ($3.57 per million British thermal units) as of 12:55 p.m. New York time, according to NGX, a Canadian Internet market. Gas traded on the exchange is shipped to users in Canada and the U.S., and is priced on TransCanada Corp.’s Alberta system.

Gas for October delivery on the New York Mercantile Exchange fell 7.5 cents to $3.979 per million Btu at 1:13 p.m.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 15.7 billion cubic feet, 124 million below target.

Flow Rates

Gas was flowing at a daily rate of 2.41 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 1.99 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.47 billion cubic feet. The system was forecast to carry 1.28 billion cubic feet today, about 47 percent of its capacity of 2.76 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 2.74 billion cubic feet at 10:35 a.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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.