Canada Natural Gas Tumbles as Storage Rises More Than Estimates

Canadian natural gas fell after a U.S. government report said stored reserves of the fuel increased more than analysts estimated.

Stockpiles of gas rose 72 billion cubic feet last week to 1.76 trillion, the Energy Department said today. Analysts expected an increase of 67 billion, the median of estimates compiled by Bloomberg.

“The market has gotten accustomed to the number being bullish,” said Kyle Cooper, director of research for IAF Advisers in Houston. “This is the first time in a long time that it wasn’t.”

Alberta gas for June delivery dropped 17.25 cents, or 4.6 percent, to C$3.605 per gigajoule ($3.53 per million British thermal units) as of 11:15 a.m. New York time, according to NGX, a Canadian Internet market. Gas traded on the exchange goes to users in Canada and the U.S. and is priced on TransCanada Corp.’s Alberta system.

Natural gas for June delivery on the New York Mercantile Exchange slid 25.8 cents, or 5.6 percent, to $4.319 per million Btu as of 11:32 a.m.

Flow Rates

Volume on TransCanada’s Alberta system, which collects the output of most of the nation’s gas wells, was 16 billion cubic feet as of 10 a.m. in New York, about 173 million below its target level. Gas production has declined in western Canada because the ground is too soft to move heavy equipment to well sites.

Gas was flowing at a daily rate of 2.62 billion cubic feet at Empress, Alberta, where the fuel is transferred to TransCanada’s main line.

At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to the Chicago area, the daily flow rate was 1.79 billion cubic feet.

Available capacity on TransCanada’s British Columbia system at Kingsgate was 1.28 billion cubic feet. The system was forecast to carry 1.63 billion cubic feet today, about 56 percent of its capacity of 2.9 billion.

The volume on Spectra Energy’s British Columbia system, which gathers the fuel in northeastern British Columbia for delivery to Vancouver and the Pacific Northwest, totaled 3.01 billion cubic feet at 10:05 a.m.

(Source: http://www.bloomberg.com/news/2011-05-05/canada-natural-gas-tumbles-as-storage-rises-more-than-estimates.html)