With another month of anemic storage injections in September, Alberta natural gas storage levels remain on track to start the next heating season at a 13-year low. Still, while Alberta gas storage has been lagging well behind in terms of average injection rates and storage levels for many months now, forward winter contract prices for the Western Canadian gas price benchmark of AECO have budged only a little. There is potential for an improvement in storage injection rates during October after a recent regulatory approval affecting the Alberta gas pipeline system, but there is little time remaining in the current injection season to make much of a difference in inventory levels going into winter. Today, we conclude this two-part series with a look at why the AECO forward market remains largely unconcerned with low Alberta gas storage levels.
When we last blogged about Alberta gas storage activity in mid-September, it was clear injections had been very slow in August. Now, with another full month of data, we know that the month of September was no better. Cumulative injections last month totalled a miserly 3 Bcf — putting the month-ending storage level at 318 Bcf — one of the least impressive build-ups in supply for September since the turn of the century. This has kept the cumulative injection for the current storage injection season (April through September) at a 20-year low and left Alberta storage levels at a 13-year low heading into October.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
As we outlined in Part 1, some of the reasons for the weak storage injections this year (and for the past couple of years, for that matter) relate to the unique procedural changes undertaken on the TC Energy-owned Alberta gas pipeline network. (We first discussed this in Don’t Do Me Like That). These changes, which came into effect in August 2017, sharply restricted the flow of interruptible-service gas supplies on the pipeline network during periods of pipeline maintenance; previously, firm-capacity flows had been restricted during maintenance. Since the system doesn’t allow firm capacity for gas flows into storage and all injections occur on an interruptible basis, the rule change ended up severely limiting storage injections and undercutting the market’s ability to rebuild stocks as quickly during the non-heating season.
Historically, that kind of a sustained inventory deficit relative to previous years would have sparked a rally in winter forwards pricing, since lower storage levels mean there’s less gas squirreled away to help meet peak winter demand. However, the forward market this year has shown minimal concern heading into heating season.
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About the song
"Don't Be Afraid" was written by Tom Scholz and is the closing track on side two of Boston's second studio album, Don't Look Back. The song is from a demo that Scholz had recorded before Boston got its record deal. The album was produced by Scholz and recorded at his Hideaway Studio in Maynard, Massachusetts. Don't Look Back, released in August 1978 was two years in the making, as a follow-up to Boston's majorly successful and multi-platinum 1976 debut album, Boston. Three singles were released from the album. "Don't Look Back" went to #4 and "A Man I'll Never Be" went to #31 on the Billboard Hot 100 charts. The album went to #1 on the Billboard Top 200 Albums chart and has been certified 7x Platinum by the Recording Industry Association of America. Personnel on the album were: Brad Delp (lead and harmony vocals), Tom Scholz (lead and rhythm guitar, bass, organ, piano, percussion), Barry Goudreau (lead and rhythm guitar, slide guitar), Fran Sheehan (bass) and Sib Hashian (drums).
Boston is an American rock band formed in Boston in 1975. Band leader Tom Scholz is also an engineer and inventor. He was responsible for the development and marketing of the highly successful Rockman in 1982, a popular studio rack guitar amplifier that has been used by guitarists on many recordings. Boston has released six studio albums, one compilation album and 16 singles. They have sold more than 75 million records worldwide. Original Boston singer Brad Delp died in 2007. Drummer Sib Hashian passed away in 2017. Founding member Tom Scholz still tours under the Boston banner with a rotating cast of musicians.
