Tuesday, February 4, 2014

Western Canada Natural Gas Storage Continues Rapid Decline

Extended cold weather across North America pulled exceptional volumes of natural gas from storage caverns in Alberta last month.  Storage has fallen 206 BCF since the beginning of the season on November 1, or 113 BCF more than the previous winter to date.  

This is set to continue for at least another week, and deplete inventories before injection season begins, typically in mid March.  Analysts should be revising down their expectations for Canadian gas exports to the U.S. for the remainder of the year, further supporting gas prices through the summer.  

This despite a solid increase in production across the province in January.  January 2013 field receipts averaged 9.69 BCFD, 0.27 BCFD below this year's average of 9.956 BCFD.

The production increase is not yet properly a trend, though it may surprise those who expect flat volumes in 2014, as the Alberta natural gas rig count continues to rocket ahead of 2013 drilling levels, with horizontal gas rigs reaching 123 last Friday, 50% higher than year ago levels.