While it’s widely known that Canada’s natural gas prices and exports have been under increasing pressure from rising gas supplies in the U.S., forcing an ever-deeper discount for AECO — Canada’s primary gas price benchmark — versus U.S. benchmark gas prices, a homegrown development is making the situation worse. Growing unconventional gas supplies from the Montney and related plays in Western Canada are bumping up against insufficient pipeline takeaway capacity from this producing region. Will Canadian gas markets be able to adapt to all of these growing supplies on both sides of the border or simply wither away as U.S. supplies take more and more market share? Today, we kick off a multi-part series examining the highly complex problems facing Western Canadian gas producers.
We have explored some of the increasing pressure points on Canadian natural gas in prior blogs. In our On the Border series, we extensively reviewed cross-border gas flows between the neighboring countries, examining how the growth in U.S. gas supplies has affected Canada’s primary export/import corridors to the U.S. Northeast, Midwest and Western markets. In the Northeast, the battle has been largely won by Marcellus/Utica gas supplies, which have not only pushed back Canadian gas exports, but also made the Northeast a net exporter of natural gas to Canada for most days and months of the year — the exception being when extremely cold weather necessitates an export boost from Canada to cover demand needs on the U.S. side of the border.
RBN Energy’s South Texas Energy Infrastructure Map brings together all the pieces of the critical and complex puzzle of the greater Corpus Christi region. Spanning from Point Comfort, TX to Corpus Christ, TX and south of the Agua Dulce natural gas hub, the map details the processing, transportation and export facilities in RBN Energy’s classic clear, concise and easy to comprehend style.
A similar situation is starting to emerge in the Midwest; there, Canadian market share and exports to the region are eroding thanks to the expanding pipeline footprint that is bringing increasing volumes of Marcellus/Utica gas to the Midwest. Rising supplies of associated gas from the Bakken also have contributed to limiting Canadian gas exports to the region. Canadian net gas exports into the Midwest still have the upper hand for now, but that grip is slipping as U.S. supply continues to increase. Canadian exports to the West have actually been growing, helping to keep Canada’s total net gas exports relatively stable in the past few years. But this long-term trend may also be at risk, as rising Marcellus/Utica/Bakken supplies are forcing more U.S. Rockies-sourced supplies that previously moved east to the Midwest to stay closer to home and instead compete for market share in the West. This, even as renewable energy sources and other factors dampen natural gas demand in California and other West Coast markets.
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About the song
“Get Me Out of Here,” written by Stephan Jenkins, is the eighth track on the fifth studio album, Dopamine, by alternative rock band Third Eye Blind. The song and album were released in summer 2015 and reached #1 on the Billboard Independent Albums chart shortly after release. The song, along with many others on the Dopamine album written by Jenkins, took more than six years to finally reach completion, due to Jenkins’s frequent bouts with writer’s block and the band’s heavy touring schedule.
Third Eye Blind is an American alternative rock band formed in San Francisco in 1993. Originally consisting of the songwriting duo Stephan Jenkins and Kevin Cadogan, the band has also included Arion Salazar and Brad Hargreaves; the group released its first studio album in 1997. After the release of the band’s second album in 1999, Cadogan left the band, and numerous additional personnel changes have taken place over the years. Jenkins remains responsible for most of the band’s songwriting efforts, but frequently invites collaborations with other songwriters and other members of the band. Third Eye Blind remains active to this day, touring and releasing occasional extended singles.
