For the first time since the economy turned sour in mid-2008, Canadian natural gas exporters have chalked up a month of across-the-board gains in sales volumes, prices and revenues.
The latest gas trade scorecard by the National Energy Board (NEB) shows the respite from the recession came in August, when heat waves warmed up demand for gas as fuel for power plants that ran hard to keep air conditioners going.
Canadian pipeline deliveries to the United States rose by about 2% to 293.2 Bcf in August from 288.3 Bcf during the same month a year earlier.
The monthly average price fetched by Canadian gas at the international boundary jumped by 28% to US$4.08/MMBtu from US$3.20 in August of 2009.
Total export revenue last August shot up by 30% to US$1.204 billion from US$927.6 million during the same month of 2009.
As a bonus, exchange-rate trends finally stopped amplifying negative effects of sometimes marginal market changes into perpetually large financial swings. For nearly two years until this summer, steady gains in the monthly average value of Canada's currency compared to American specie continuously reduced the worth of exports faster than erosion of sales volumes.
With the U.S. and Canadian dollars stabilizing near par, exporters counted gains as measured by their home currency. In loonies the average border price in August was C$3.96/gigajoule (GJ), up 22% from C$3.24/GJ for the same month of 2009. Revenues for the summer month were C$1.253 billion, up 24% from C$1.009 billion for August of 2009.
For the first 10 months of the Nov. 1 through Oct. 31 contract year tracked by the NEB, Canadian gas exports are still slightly in negative territory on the volume front.
Pipeline deliveries to the U.S. during November-August of 2009-2010 are down by 1% to 2.758 Tcf from 2.787 Tcf for the same period of 2008-2009.
But 10-month average prices are up by 3% to US$4.75/MMBtu for 2009-2010 from US$4.61/MMBtu the previous contract year. Export revenues for the November-August period improved by 2% to US$13.197 billion from US$12.96 billion.
While things might be looking up for Canadian exports currently, producers to the north might not want to count on the upward trajectory lasting. Industry consultant Bentek Energy LLC predicts that a number of factors in the Lower 48 -- most notably shale gas supplies -- will push Canadian imports out (see Daily GPI, Nov. 19).
The bleakest entries in the NEB scorecard were generated by the exchange rate trends of a rising Canadian loonie and descending U.S. dollar. In the exporters' home currency, the 10-month average border price for 2009-2010 dropped 11% to C$4.61/GJ from C$5.18/GJ in 2008-2009. Revenues in loonies fell 12% to C$13.745 billion from C$15.609 billion.
Canadian industry analysts remain far from convinced that the international market has taken a lasting turn for the better. Barring widespread cold snaps, surpluses in Canada and the U.S. alike are expected to cancel or limit the traditional annual fall gas price rally as heating season begins.
Western Canadian supplies remain "robust" as a byproduct of a surge in drilling for oil targets that often include associated gas, says a research note by FirstEnergy Capital Corp. Supplies are especially strong in Alberta, home to the majority of new tight oil activity that uses the technology of horizontal drilling and hydraulic fracturing.
FirstEnergy estimates that Canadian gas storage levels have peaked at about 736 Bcf, near the top of their historical range. Hopes for a strong heating season are being raised by a numbing first blast of winter across the western provinces following an exceptionally warm fall by regional standards.
In the industry capital of Calgary, down-filled coats are being pulled from closets and road traffic is congealing into a painfully slow crawl as a result of heavy snow and a steep drop in temperature toward minus 20 degrees Celsius (minus 4 degrees Fahrenheit) or colder, with both conditions greatly aggravated by potent north winds. Furnaces are cranked up, warming gas marketer hearts.
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