Canadian Natural Gas Gains as Air-Conditioner Use Sparks Demand

Canadian natural gas rose, headed for a monthly gain, amid hotter-than-normal weather across the U.S. that has boosted air-conditioner use.

June gas in Alberta advanced 3.6 percent. Cooling demand across the U.S. will average 80 percent above normal through May 7, according to Weather Derivatives. Demand for gas-fired power increases with air-conditioner use and gas prices that touched decade lows in the past month have prompted fuel switching, said Stephen Smith, an energy analyst in Natchez, Mississippi.

“There is ongoing evidence for large-scale shifts from coal-fired generation to gas-fired generation,” said Smith, president of Stephen Smith Energy Associates.

Alberta gas for June delivery rose 6 cents to C$1.735 a gigajoule ($1.67 per million British thermal units) as of 3:05 p.m. New York time on NGX, a Canadian Internet market. May gas gained 5.5 cents to C$1.69 per gigajoule.

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 up 2.8 percent this month, paring its year-to-date decline to 39 percent.

Natural gas for June delivery rose 9.9 cents, or 4.5 percent, to settle at $2.285 per million Btu on the New York Mercantile Exchange.

Spot Prices

Spot gas at the Alliance delivery point near Chicago fell 1.13 cents to $2.14 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 rose 6.34 cents, or 3.4 percent, to $1.9296 per million Btu. At Malin, Oregon, where Canadian gas is traded for California markets, prices advanced 9.52 cents, or 4.9 percent, to $2.0329.

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16.9 billion cubic feet, 109 million above target.

Gas was flowing at a daily rate of 2.09 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 2.13 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.15 billion cubic feet. The system was forecast to carry 1.5 billion cubic feet today, or 57 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 2.97 billion cubic feet at 1:50 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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