Canadian natural gas exporters are dining out on the tight continental market, taking in rich increases in revenue from the United States at the same time as their ability to deliver continues to falter.

Export revenue climbed 90% to $9.5 billion in the first six months of the current contract year that ends Oct. 31 compared to $5 billion in the same period of 2001-02, according to records kept by the National Energy Board.

All price references are in U.S. dollars.

Sales volumes barely held their own, rising by a marginal two-tenths of one per cent solely on the strength of a short-lived revival of the trade’s 1985-2001 growth record last November and December. Canadian pipeline deliveries to the U.S. fell for the fourth consecutive month in April.

Canadian export shipments in the first half of the 2002-03 contract year were 1.863 Tcf, compared to 1.859 Tcf in the same period of 2001-02. In April, deliveries to the U.S. slipped by 6% to 271 Bcf compared to 287 Bcf in the same month a year earlier. The performance continued a pattern of drops by 6% to 312 Bcf this January, by 7% down to 291 Bcf in February and by 8% in March to 301 Bcf.

Average prices fetched at the international border during the first half of the current contract year rose by 91% to $5.07/MMBtu compared to US$2.66 in the same period of 2001-02. Measured in Canadian dollars, the revenue and price increases were smaller due to changes in the currency exchange rate but still weighed in at hefty levels exceeding 80%.

First-half price improvements on the major U.S. destinations for Canadian gas were led by the Middle West, with a jump of 101% to $5.12/MMBtu compared to $2.54 for the same period of 2001-02.

Deliveries to the U.S. Northeast during November through April of 2002-03 fetched an average $5.46, up 84% from $2.96 during the first half of the 2001-02 contract year. California exports averaged $4.41, up 82% from $2.43. Average prices for Canadian deliveries to the U.S. Pacific Northwest rose 72% to $4.49 in the first six months of the 2002-03 contract compared to $2.61 a year earlier.

There were no signs of the decline in export delivery volumes being significantly reversed in the second half of the gas contract year.

Virtually all Canadian government and private forecasters continued to predict flat to declining production capacity, although erosion of domestic consumption was expected to free up some volumes for U.S. markets.

The stage was believed to be set for a recovery from early summer softness in prices. FirstEnergy Capital Corp., a Calgary investment house that makes a specialty of tracking gas markets in depth, pointed to “potential positive trends” developing on the western side of the continent from the Canadian exporter point of view. The financial analysts said they detected a steep drop of 19% during July in power production in the Pacific Northwest due to reductions in water flows at hydroelectric dams.

The Canadians predicted sharp increases in regional demand for exports by gas-fired power stations as summer heat waves generate high air-conditioning loads on the electricity grid. Flows to the U.S. Pacific Northwest are already on the rise via the TransCanada-Pacific Gas connection at the boundary between British Columbia and Idaho.

FirstEnergy pointed out that such increases in demand for gas-fired power could last long enough to make U.S. markets and prices register effects of a further tightening in Canadian supplies coming Sept. 1, when the Alberta Energy and Utilities Board has ordered producers to start a permanent shut-in of about 250 MMcf/d in order to protect natural pressures in oil-sands reservoirs.

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