With natural gas prices reaching levels not seen in seven years, Western Canada is doing all it can to help increase gas supply, with recent data showing monthly production hitting multi-year highs. Moreover, Canadian forward gas prices are at the highest levels since 2014, gas pipeline expansions are in place or being constructed to accommodate future supply expansion, and gas-focused drilling activity remains strong — all of which may as well be a prescription for sending gas production to record levels later this year and in 2022. In today’s RBN blog, we provide an update on the recent gas production growth in Alberta and neighboring provinces and why more growth is coming.
Western Canada’s natural gas production continues to play an important role in the North American market. Nearly half of Canada’s output is exported to its neighbor to the south and that supply has helped to backstop a U.S. market that would otherwise be even tighter than it currently is given the enormous pull of U.S. gas to Mexico and LNG export docks. Importantly for this year’s — and probably next year’s — gas market balance, Western Canadian gas production growth has been strong this year and may be on track to chalk up one of its biggest annual supply gains in 20 years.
The Crude Voyager is a weekly analysis of U.S. Gulf Coast loading activity that explains the ebbs and flows of crude loadings, destinations, and geopolitical issues impacting U.S. exports. It outlines the major paths for laden tankers hauling U.S. crude all over the world and reflects the change in tanker departures to the main regions that consume U.S. crude.
Only a year ago, in Life Ain’t Easy, we were discussing a very different outlook for Canadian gas production. For a good part of 2020, supplies had tracked lower, first in response to the short-lived OPEC-Russia price war, which undercut producer spending on all things related to oil and gas supply, and later the COVID-19 pandemic-related disruptions that limited the availability and mobility of rig crews. Additionally, the pandemic’s impact on North American and global gas demand led to the temporary oversupply of gas in the U.S. as LNG exports dropped off sharply through the summer due to weak European and Asian demand. It was the perfect combination of events to keep natural gas prices low and undermine production on both sides of the U.S.-Canada border. In the end, Canadian gas production fell by a modest 0.32 Bcf/d (-2.0%) in 2020 to 15.4 Bcf/d (red column in Figure 1), on average, but it was the second consecutive year of decline. In 2019 output fell 0.38 Bcf/d (-2.3%) on the back of extreme weakness in the Canadian AECO price benchmark. Worse, the combined supply loss from 2019 and 2020 effectively unwound the record gains made in 2018 (+0.72 Bcf/d).
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About the song
"I Can't Help Myself" was written by Motown songwriters Holland-Dozier-Holland and appears as the first track on side one of the Four Tops Second Album. Released as a single in April 1965, the song went to #1 on the Billboard Hot 100 and R&B Singles charts. Personnel on the record were: Levi Stubbs (lead vocals), Abdul Fakir, Renaldo Benson, Lawrence Payton, The Andantes (backing vocals), The Funk Brothers (instrumentation, including James Jamerson on bass, and Mike Terry (baritone sax), and the Detroit Symphony Orchestra (strings). Several artists have covered the song, including: The Supremes, Bonnie Pointer, Johnny Rivers, and Donnie Elbert.
Four Tops Second Album was recorded at Studio A at Hitsville USA in Detroit during 1965. All the songs on the album were written by Holland-Dozier-Holland, and the record was produced by Brian Holland, Lamont Dozier, and Smokey Robinson. Released in November 1965, the LP went to #3 on the Billboard R&B Albums chart, and #20 on the Billboard Top 200 Albums chart. Three charting singles were released from the album.
The Four Tops are an American R&B vocal quartet from Detroit that defined the city's Motown sound of the sixties. The original quartet of Levi Stubbs, Abdul Fakir, Renaldo Benson, and Lawrence Payton remained together for over four decades, from their formation in 1953 to 1997. They released 27 studio albums, two live albums, ten compilation albums, and 59 singles. They are members of the Rock and Roll Hall of Fame, Rhythm and Blues Music Hall of Fame, and Grammy Hall of Fame. They hold a Grammy Lifetime Achievement Award and a Rhythm and Blues Foundation Pioneer Award. Lawrence Payton died in 1997, Renaldo Benson in 2005, and Levi Stubbs in 2008. The Four Tops continue to perform with Abdul Fakir as the last surviving original member.
Comments
...into LNG tankers. I do wonder how much of the recent growth in BC production is also driven by the need to begin setting the stage for Kitemat LNG. After all, you can't just turn the tap on one the terminal is complete - they need years of drilling to grow production enough to meet all that new demand. So the question is: would this pace of growth have taken place had there not been an LNG export terminal under construction?