A 60% drop in the price of Canadian natural gas over the past 10 months has prompted a surge of recent imports from the northern neighbor as the U.S. wrestles with an unusually high summer demand, the U.S. Energy Information Administration (EIA) said in its Natural Gas Weekly Update.
The price of natural gas at Niska Gas Storage Partners LLC’s AECO Hub in Alberta, typically above the U.S. benchmark Henry Hub price, dropped below the Henry Hub price in early March and was 56.5% less at the close of trading on Aug. 11. AECO consists of two facilities, Suffield and Countess, with about 154 billion cubic feet (Bcf) of working gas storage capacity.
The EIA reported that U.S. natural gas imports from Canada were expected to reach 7.8 Bcf/d on Aug. 11, with imports topping 8 Bcf/d that came close to setting a record in late July. The five-year average for Canadian imports from June through Aug. 10 is 6.8 Bcf/d, the EIA said.
Pushing the increased demand are high temperatures across much of the country, and U.S. utilities’ heavier reliance on natural gas and not coalto fuel their power generation plants.
The average July temperature in the Lower 48 was 75.3 degrees Fahrenheit (F), the 14th-warmest on record since 1895 and 1.6 F above the 20th-century average, according to data from the National Centers for Environmental Information (NCEI), a division of the National Oceanic and Atmospheric Administration. The U.S. average temperature of 54.3 F for the first seven months of 2016 constitutes the third-warmest on record.
Natural gas storage in Canada is at seasonally high levels and averaged 621 Bcf for the first six months of 2016, which is 50% above the same period in 2015, the EIA said. U.S. gas storage experienced a rare summer decline for the week ending July 29 as utilities scrambled to keep up with demand.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
Recommended Reading
Enterprise Buys Assets from Occidental’s Western Midstream
2024-02-22 - Enterprise bought Western’s 20% interest in Whitethorn and Western’s 25% interest in two NGL fractionators located in Mont Belvieu, Texas.
Report: Occidental Eyes Sale of Western Midstream to Reduce Debt
2024-02-20 - Occidental is reportedly considering a sale of pipeline operator Western Midstream Partners as the E&P works to close a $12 billion deal in the Permian Basin.
Sitio Royalties Dives Deeper in D-J with $150MM Acquisition
2024-02-29 - Sitio Royalties is deepening its roots in the D-J Basin with a $150 million acquisition—citing regulatory certainty over future development activity in Colorado.
Analysts: Diamondback-Endeavor Deal Creates New Permian Super Independent
2024-02-12 - The tie-up between Diamondback Energy and Endeavor Energy—two of the Permian’s top oil producers—is expected to create a new “super-independent” E&P with a market value north of $50 billion.
E&P Highlights: Feb. 12, 2024
2024-02-12 - Here’s a roundup of the latest E&P headlines, including more hydrocarbons found offshore Namibia near the Venus discovery and a host of new contract awards.