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Value of North America Gas Trade Falls Every Which Way

The value of international trade in natural gas fell at every pipeline border crossing in North America on deliveries in all directions among Canada, the United States and Mexico in the first half of this year, said the U.S. Department of Energy (DOE).

The average price fetched by the biggest supply block, Canadian exports to the U.S., dove by 49% to US$3.23/MMBtu in first-half 2015 from US$6.31 during January-June of 2014, according to DOE.

American exports to Canada fared even worse. The first-half 2015 average price for northbound deliveries fell by 54% at the border to US$3.43/MMBtu from US$7.47/MMBtu during the same period last year.

Markets glutted by rising shale production across the continent cut prices earned on southbound U.S. pipeline deliveries to Mexican destinations by 41%, down to an average US$3.00/MMBtu in first-half 2015 from US$5.07 in first-half 2014.

The price fetched by Mexican gas exports into the U.S. lost 51% by dropping to US$1.87/MMBtu during January through June compared to US$3.79/MMBtu in the same period of 2014.

Rising sales partly made up for price sorrows among U.S. gas producers and merchants, but not their Canadian counterparts. The growth front in the continental gas trade moved south to the U.S. border with Mexico.

The volume of Canadian exports hovered at their eroded level since the shale gale blew away the previous era of seasonal demand highs, supply limits, tall price spikes, rich producer earnings and government royalty windfalls.

In first-half 2015 Canadian pipeline deliveries into the United States stagnated at 7.7 Bcf/d, or a six-month total of 1.4 Tcf, rising by only a paltry 0.5% from 1.39 Tcf in the same period of 2014. Annual Canadian exports peaked at about 10.5 Bcf/d, or 3.8 Tcf, seven years ago, when the average border price was also more than double the current low.

U.S. gas shipments north into Canada slipped by 13% in the first half of this year, down to 372 Bcf in total or 2.1 Bcf/d from 428 Bcf, or 2.4 Bcf/d, during the same period of 2014.

But U.S. exports into Mexico jumped by 34% during first-half 2015, rising to 462 Bcf, or 2.6 Bcf/d, compared to a six-month total of 372 Bcf, or 1.9 Bcf/d, in the same period of last year.

Mexican exports to the United States all but vanished, falling by 39% to a first-half 2015 total of 500 MMcf from 800 MMcf during the same period of 2014.

The embryonic international trade in ocean tanker deliveries of liquefied natural gas (LNG) stayed modest but showed signs of life in the United States. U.S. LNG imports grew by 48% to a first-half 2015 of 46 Bcf and overseas export cargoes rose by 142% to 11 Bcf.

Total U.S. gas exports to all destinations by all means advanced by 9% to 846 Bcf, or 4.7 Bcf/d, in first-half 2015 from 779 Bcf, or 4.3 Bcf/d, in January-June 2014. Total U.S. imports from all sources rose by a marginal 1.5% to 1.447 Tcf in the first six months of this year from 1.426 Bcf in the comparable period of 2014. Net U.S. reliance on imported gas shrank by 7% to 601 Bcf in first-half 2015 from 647 Bcf for the same period of 2014.

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