Canadian natural gas dealers took a cold financial bath in the first half of this year, when downpours of falling sales volumes and prices cut their export revenues by 48%. Pipeline deliveries from Canada into the United States dropped 8% to 1.5 Tcf in the first half of 2012 (IH2012), down from 1.64 Tcf in the same period of 2011, according to trade records kept by the National Energy Board (NEB).

The average price fetched by Canadian gas at the U.S. border plunged 42.5%, down to US$2.47/MMBtu, compared with US$4.30/MMBtu a year earlier. The combination punches of decaying shipments and tumbling prices knocked Canadian gas export revenues down to US$3.471 billion in 1H2012 from US$7.284 billion in 1H2011.

Western Canadian gas producers and merchants also continued to face increased American competition in their formerly sheltered home markets, especially in Ontario and Quebec. NEB records, echoing accounts kept by the U.S. Department of Energy’s Office of Natural Gas Regulatory Activities, suggest that a new era of two-way trade has arrived to stay on the continental market, created by an open border, uncontrolled prices and expanding pipelines. Canadian imports of U.S.-sourced gas were 511 Bcf during January-June of this year.

U.S. pipeline deliveries north across the border were down by 24% from a stellar performance of 668 Bcf in the first six months of 2011, but even the diminished U.S. sales were still higher than domestic exports for all of 2007, when full-year pipeline imports into Canada were 466 Bcf. The 1H2012 sales also still left U.S. gas exporters within reach of matching or topping their full-year 2011 record sales performance on Canadian markets of 994 Bcf.

Fallen prices ate away the value of the U.S. and Canadian side of the continental gas trade. The 1H2012 average fetched by U.S. production at the border fell by 41% to US$2.68/MMBtu from US$4.57/MMBtu in January-June 2011. Domestic revenues from pipeline exports north into Canada fell by 55% to US$1.39 billion in the first half of this year from US$3.086 billion a year earlier.

There’s a gas glut and almost full storage on both sides of the border this year. Although the problem is on a smaller scale on the Canadian side, there is so much gas already compressed into storage sites that there is little room left to hold additional supplies until the next heating season raises fuel demand. As of the end of July the Canadian Gas Association reported 717 Bcf in Canadian storage sites. The total topped the previous maximum mid-summer national total — 673 Bcf, recorded in 2009 — by 6%.

A pronounced switch in drilling targets by almost all Canadian exploration and production companies over the past four years, to far higher-priced oil and lighter liquid hydrocarbons, has yet to make any big dent in the gas surplus.

The NEB’s annual summer market outlook report observed that the Canadian drilling switch has the same limited effects on gas supplies as comparable industry behavior in the U.S. Changing targets does not necessarily translate into proportionate adjustments in flows from wells because gas, oil and liquids do not occur in tidily separate geological deposits. The board’s estimates rate current combined American and Canadian gas production at about 78 Bcf/d, including 64 Bcf/d in the U.S. and 14 Bcf/d in Canada.

“Altogether it is expected that total U.S. Lower-48 and Canadian production will remain steady over the next few months despite the decline in drilling,” the NEB said. “In some instances companies drilling for oil and other liquids produce significant volumes of associated natural gas that is not influenced by the level of natural gas prices.”

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