Prices are firming for western Canadian natural gas as intended by a delivery rule change enacted in September on TC Energy Corp.’s supply grid in Alberta and British Columbia, Nova Gas Transmission Ltd. (NGTL).

After averaging 70% below the North American Henry Hub benchmark since mid-2017, the discount suffered by gas traded on NGTL has shrunk by more than half, according to records kept by the Petroleum Services Association of Canada.

By granting priority to deliveries into storage, the new rule lets shippers drain surpluses off NGTL during seasonal gas demand lows and pipeline capacity interruptions for maintenance and construction, said the ARC Energy Research Institute.

Stabilized, firmer prices developed swiftly after the Canada Energy Regulator (CER) authorized the NGTL tariff amendment, which was requested by gas producers and the Alberta government over consumer objections.

The western Canadian gas discount on Tuesday was 49 cents below the Henry Hub close of $2.26/MMBtu. At the same time last year, gas on NGTL trailed the American benchmark by $1.05/MMBtu.

ARC analysts suggested the new NGTL delivery priorities rule would turn out to be a benefit for consumers by ensuring storage facilities are full enough to prevent supply strains during winter cold snaps.

Flows into Alberta gas storage caverns, currently up to 5 Bcf/d, have begun to restore inventories that had been stagnating at 13-year lows, ARC said.

The NGTL delivery rule change is scheduled to last for the rest of the current pipeline maintenance period and the 2020 work season. Facilities additions are forecast to relieve pressure on the network by 2021.

A C$6.7 billion ($5 billion) NGTL renovation and expansion program that’s scheduled for completion in April 2022 is on schedule in the face of tightened environmental policing and objections by native tribes in the construction areas.

Amid the stabilized prices, the CER granted approval Tuesday for NGTL to advance the growth program by installing a C$170 million ($128 million) leg of 48-inch diameter pipeline called the North Central Corridor Loop. The regulator and the pipeline devised multiple approval conditions to satisfy national requirements for protecting caribou and grizzly bear habitat, and for continuing aboriginal consultations.

The NGTL delivery rules change is an essential adaptation to current western Canadian market conditions of a North America-wide supply glut worsened by service interruptions during pipeline improvement work, ARC said.

“Alberta’s price has been choppy and weak compared to U.S. pricing, especially outside of the higher demand winter months. Low-demand ‘shoulder season’ prices have averaged near C$ 1.00/GJ [80 cents/MMBtu] or a 70% discount to the United States over the past few years,” ARC added.

“At these low prices most Canadian dry gas producers cannot cover their cash costs, including services for keeping wells operating, processing costs and transportation tolls.”