U.S. natural gas exports to Canada are up 12.5% this year, adding on average more than 170 MMcf/d of gas flowing north versus a year ago, while Canadian imports -- forecast to be sharply down -- are flat, according to an analysis by Bentek Energy LLC.
Bentek's review of gas pipeline flow information discovered that an average increase of 170 MMcf/d has been flowing mostly into the Dawn Hub in Ontario via border crossing points at St. Clair and Ojibway, MI. Gas at these export points may be sourced from Great Lakes Gas Transmission or from pipes bringing gas north from the Gulf of Mexico and the Midcontinent, Bentek noted.
"The numbers revealed a couple of unexpected developments," said Bentek Managing Director Rusty Braziel. "First, Canadian imports are not down this year the way they were from '05 to '06. That is a change from what many folks in the industry have been saying. Second, the U.S. is shipping more gas into Canada, presumably to meet increased demand. The U.S. always delivers significant volumes to Canada, some sourced from U.S. production -- a portion of that comes across the border from Canada and then makes the trip back across to Canada. But that is not what is going on this year. In 2007 it is the U.S. production volume that is pushing the U.S. export numbers up."
Bentek senior analyst Jack Weixel said the analysis "clearly demonstrates that this increase in U.S. exports is from supplies that originate in the U.S. Since Canadian gas can make its way back into Canada via the Great Lakes system, the import/export statistics can be misleading -- with increased exports in fact coming from increased Canadian supplies.
"In 2007, this is not the case. We know this because flow data from Canada from the Emerson border crossing point into Great Lakes shows that Canadian import volumes at this point have decreased by 1.6%. Thus, increased flows into the Dawn Hub must be the result of increased supplies from the U.S."
And contrary to earlier estimates by several energy analysts and Canadian officials, total gas imports to the Lower 48 states are flat this year. According to Bentek, year-to-date imports into the United States from Canada have fallen only about 0.4% versus a year ago -- compared with a 4.1% decline in 2006 versus 2005.
Many market participants had been expecting the decline of Canadian production to lead to declining imports to the United States, but so far this year that has not occurred, Bentek noted. Total Canadian production for 2007 is "likely" to decline by only 2.3% versus 2006 levels.
According to Bentek, average daily marketed production flowing on inter-provincial pipes in Canada totaled 14.8 Bcf/d in 2006, compared with 14.5 Bcf/d year-to-date in 2007.
"In 2006, nearly 77% (11.4 Bcf) of production came from Alberta," Bentek noted. "This year, Alberta production is averaging just shy of 11.1 Bcf/d, accounting for nearly the entire drop in total Canadian production. In the third quarter of 2007, daily production in Alberta dipped below 11 Bcf/d, and month-on-month average Alberta field receipts on NOVA have been dropping since September 2006."
Total Canadian gas demand is flat this year compared with 2006, with intra-provincial demand on the TransCanada NOVA system in Alberta showing a slight increase of 45 MMcf/d this year, Bentek noted.
For more information on Bentek's Canadian Examiner report, visit www.bentekenergy.com or call (888) 251-1264.
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