Canadian Natural Gas Increases as Extreme Cold Slows Production

Canadian natural gas rose as extreme cold in Alberta boosted local demand for the furnace fuel and may crimp production.

Alberta gas rose 1.9 percent after temperatures in Calgary touched minus 28 Celsius (minus 18 Fahrenheit) yesterday, according to Environment Canada. Extreme cold can cause gas wells to freeze and processing equipment to work less efficiently. Forecasts for snow and cold in the U.S. North may not support gains in gas prices.

“It’s too little, too late,” said Carl Neill, an consultant with Risk Management Inc. in Atlanta. “The question now is how low can gas go.”

Alberta gas for February delivery rose 4 cents to C$2.15 a gigajoule ($2.01 per million British thermal units) at 2:35 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.’s Alberta system.

Natural gas for February delivery on the New York Mercantile Exchange rose 2.1 cents to settle at $2.343 per million. The futures slipped 12 percent this week.

Gas for prompt delivery fell amid predictions that U.S. furnace use will be below normal next week. Demand for heat will trail normal by 24 percent through Jan. 27, according to Belton, Missouri-based forecaster Weather Derivatives.

Spot gas at the Alliance delivery point near Chicago tumbled 16.12 cents, or 6.2 percent, to $2.4396 per million Btu on the Intercontinental Exchange. Alliance, an express line, can carry 1.5 billion cubic feet a day to the Midwest from western Canada.

Spot Prices

At the Kingsgate point on the border of Idaho and British Columbia, gas fell 9.07 cents, or 3.6 percent, to $2.4186, according to ICE. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 7.33 cents, or 2.9 percent, to $2.4841.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.5 billion cubic feet, 270 million below target.

Gas was flowing at a daily rate of 2.72 billion cubic feet at Empress, Alberta. The fuel is transferred to TransCanada’s main line at Empress.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 2.22 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 850 million cubic feet. The system was forecast to carry 1.59 billion cubic feet today, or 65 percent of its capacity of 2.44 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 3.03 billion cubic feet at 12:50 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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