Canadian natural gas imports from the United States nosedived as a cross-country pipeline toll cut put a competitive edge on production by the western provinces, according to the latest trade scorecard compiled by the U.S. Department of Energy (DOE).
U.S. gas exports to Canada plunged by 17.25 to 236.8 Bcf, or 2.6 Bcf/d, for the first three months of 2018 from 286.2 Bcf, or 3.2 Bcf/d, in the same period a year earlier, the DOE’s regulation and international engagement office said.
The drop in northbound cross-border traffic came in the first quarter-year period of a 46% toll cut for Alberta and British Columbia (BC) gas on TransCanada Corp.’s Mainline. On a 1.4 Bcf/d package of 10-year delivery contracts, the rate dropped to C77 cents/gigajoule (65 cents/MMBtu) from C$1.42/GJ ($1.19/MMBtu).
A previous U.S. gas trade scorecard showed the trend toward a recovery of Canadian markets by Alberta and BC gas started as soon as the toll cut began last November. U.S. exports to Canada slipped by 1% to 74 Bcf last November then dropped by 16% to 81 Bcf last December compared to the corresponding 2016 months.
Alberta and BC shippers are seeking more TransCanada toll cuts in a rate case currently before the National Energy Board.
But the latest continental gas trade account registered little or no effect by the pipeline rate bargain on longer-term deterioration of Canadian sales into the United States in competition against low-cost domestic gas production.
In 1Q2018, Canadian pipeline exports dipped by 1.3% to 815.9 Bcf, or 9.1 Bcf/d, from 826.3 Bcf, or 9.2 Bcf/d, in 1Q 2017.
The competitive trade held down heating season border prices. U.S. exports to Canada gained less than a nickel in 1Q2018 to average $3.34/MMBtu, compared with $3.30/MMBtu in 1Q2017.
Canadian exports to the United States lost a penny in the first three months of this year, averaging $2.87/MMBtu compared with $2.88/MMBtu in 1Q2017.
The overall value of Canadian exports consistently underperforms northbound cross-border sales of U.S. production. U.S. exports go to Canada’s highest-priced markets in Ontario and Quebec. Canadian gas flows to variable destinations across the continent.
The 1Q2018 trade scorecard also confirmed that Canadian suppliers have lost their long-standing stature as North America’s champion international gas merchants.
Counting U.S. sales of 392.7 Bcf to Mexico and 237.5 Bcf overseas as liquefied natural gas (LNG), total 1Q2018 U.S. exports were 867.2 Bcf -- 6% more than Canada’s 815.9 Bcf.
A year earlier Canadians were still tops, with their 1Q2017 exports of 826.3 Bcf exceeding the U.S. total of 798.7 Bcf by 3%.