Why Worry? - Above-Average Winter Withdrawals Expected for Canadian Natural Gas Storage

Canadian natural gas storage levels finished the most recent injection season at a record high. With what has been a fairly mild start to the heating season so far in North America, you might be tempted to think that Canadian storage levels would have been slow to draw down. On the contrary: so far, gas is being withdrawn from storage more quickly than might be expected from the winter weather alone, partly because of structural developments that have been emerging in the Canadian market. And these changes will help to draw storage levels down closer to historical averages by the end of the current heating season in March 2021. Today, we consider these structural changes and what the current heating season might have in store for the Canadian gas market.

Though Canada has only about one-fifth as much natural gas storage capacity as the U.S., that storage plays a vital role in balancing the gas markets in both countries. Also, while trends in Canadian gas storage have largely reflected those in U.S. gas storage, the current heating season may well provide more variation than is usual for Canadian gas storage.

This is not the first time that we have blogged about Canadian gas storage and market balances. At the start of the previous heating season, in November 2019, we published a two-part series called Don’t Be Afraid that considered forward Canadian benchmark AECO prices in the context of unusually low Alberta gas storage levels. This spring, in Got Me Under Pressure, we examined how the subsequent mild winter heating season of 2019-20 resulted in higher-than-average gas storage levels in Canada and how a combination of higher Canadian gas production and lower exports to the U.S. would impact the storage injection season that concluded at the end of October 2020.

That brings us to a good place to start when considering potential developments for the current Canadian storage withdrawal (or heating) season. As in those previously mentioned blogs, we are drawing heavily on data that is reported and discussed each week in our Canadian NATGAS Billboard, where readers can find data on each aspect of Canadian gas demand, supply, exports, imports — and, for our purposes here, gas storage. Not to put too fine a point on it, but we also understand that the availability of Canadian gas storage data has started to become more scarce in the analytic community, so having this reliable weekly source, along with the companion Excel data file, will provide you with the data and analysis that you need to stay on top of Canadian gas storage developments.

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