Canadian Natural Gas Prices Struggling as AECO Prices Near Three Year Lows

Western Canada’s natural gas market never really seems to catch a break. Prices this winter have remained well below those across much of the rest of North America thanks to an all-too-common combination of insufficient pipeline export capacity from the region, bloated gas storage and robust supply growth. Even with forward price prospects for much of the rest of the continent looking buoyant, with more gas expected to head to expanding Gulf Coast LNG terminals and a storage-refill season that will be stronger than last year, price upside for Western Canada looks to be minimal at best and will be partly dependent on the rate of gas intake to LNG Canada, as we explain in today’s RBN blog. 

For natural gas markets to operate as efficiently as possible, a lot of data is needed, including up-to-date estimates of the amount of gas in storage and the physical capacity to hold it. For too long, Canadian natural gas markets have been operating with an obvious blind spot: little to no reliable storage data. With Alberta being home to the largest amount of gas storage capacity in Canada, having accurate information could provide vital data in the pricing of Canadian natural gas. In today’s RBN blog, we begin a multi-part series examining Canadian natural gas storage, starting with Alberta. 

We’ve seen this movie one too many times. Just when natural gas prices are rallying across the world to multi-year or historic highs, another monkey wrench gets thrown into the workings of the Western Canadian gas market, imploding its suite of price markers. Last week, gas prices in Western Canada collapsed to mere pennies and even went negative for a time due to an unfortunate combination of pipeline restrictions and record-high production — a situation that will cost the region’s gas industry billions if left unchecked. In today’s RBN blog, we examine the root cause of the latest price collapse and when a turnaround might be expected.