Canadian natural gas rose amid signs that producers are drilling less and shutting some wells to ease a glut of the fuel.
Alberta gas for April delivery gained 3 percent. The U.S. gas rig count dropped to 670 last week, a 32-month low, according to data compiled by Baker Hughes Inc (BAKEGAS). Encana Corp. and Talisman Energy Inc., two of Canada’s largest gas producers, said they will shut some gas production and shift exploration efforts to oil and natural-gas liquids.
“Horizontal gas drilling is now down 31 percent from its mid-October peak,” said Stephen Smith, an energy analyst and president of Stephen Smith Energy Associates in Natchez, Mississippi. “This will have a significant impact on gas production in the second half of 2012.”
Alberta gas for April delivery gained 5.25 cents to C$1.80 a gigajoule ($1.71 per million British thermal units) as of 3:30 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.
Natural gas for April delivery on the New York Mercantile Exchange fell 1.5 cents to settle at $2.284 per million Btu.
Spot gas at the Alliance delivery point near Chicago rose 1.16 cents to $2.047 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 gained 2.19 cents to $2.0122 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, gas fell 4.85 cents, or 2.3 percent, to $2.0347.
Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.6 billion cubic feet, 169 million below target.
Gas was flowing at a daily rate of 1.81 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 2.14 billion cubic feet.
Available capacity on TransCanada’s British Columbia system at Kingsgate was 656 million cubic feet. The system was forecast to carry 2 billion cubic feet today, or 75 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 3.06 billion cubic feet at 2:35 p.m.
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