The flow of natural gas from Western Canada has reached rates not seen since April 2007, according to analysts with GMP FirstEnergy.
Since the end of October, supplies from Alberta and British Columbia have grown by a combined 1.2 billion cubic feet per day, pushing total gas from western Canada near 17 billion cubic feet per day.
“The surge that has been seen for natural gas supplies in Western Canada over the past few weeks is nothing short of remarkable,” GMP FirstEnergy said in a research note on Monday, attributing the rise to “the potent combination of new gas wellhead and gas processing capacity in the Montney and related plays, and accompanying pipeline capacity to move this gas to market.”
The supply surge has resulted in the highest gas flows through the Empress export point on Alberta’s eastern border in nearly three years, analysts wrote. There has also been an uplift in flows of about 1 billion cubic feet per day since the new long-term tolling agreement on the TransCanada Mainline took effect in November.
The increased flow of gas through Empress appears to be benefitting AECO prices the most so far, GMP FirstEnergy noted, with AECO currently trading around $2.69/mcf, up from about $0.90/mcf a week ago.
However, “AECO’s two pricing brethren in the Western Basin have yet to show real signs of an uplift given the full capacity on related pipelines leaving the region for those pricing points,” analysts noted.
“Station 2 prices continue to struggle under C$1/mcf, while prices at the Alliance ATP have staged some recovery, but have generally held under C$2 per mcf. More cold weather and deeper storage withdrawals in B.C. are going to be required to generate more recovery for these two price markers.”