Supported by the largest increase in imported Canadian gas since1995, total natural gas imports rose for the 11th straight year in1998, according to a recent Department of Energy (DOE) report.

Overall, the DOE said net imports as a percentage of totaldomestic gas grew 14% to 3,153 Bcf. Total exports grew 3% from159.7 Bcf in 1997 to 164.4 Bcf in 1998. Canadian imports, whichamounted to 3,052 Bcf, accounted for 96.8% of the total U.S. importmarket.

The Canadian imports marked a 5% growth from 1997 amounts. Thisis the largest jump since 1995, when gas imports from Canada jumped8% from 1994 levels. U.S. exports to Canada fell 23% from 59.1 Bcfin 1997 to 45.3 Bcf in 1998, creating a net import of 3006.7 Bcf.The average price of gas imported from Canada was $2.14/ MMBtuunder long-term (over two years) contracts and $1.74/ MMBtu undershort-term contracts.

The jump in Canadian imports, however, did not translate into anincrease in Canadian income. A 9% drop in international borderprices for Canadian supplies from $2.11/ MMBtu in 1997 to $1.91/MMBtu in 1998 resulted in a drop of Canadian producer revenue. TheDOE calculated the Canadian producer revenue at $5.8 billion, a$300 million decline from 1997 amounts.

Although the U.S. imported more and exported less to Canada, thereverse was the case in U.S. – Mexico gas trading. Imports fromMexico decreased from 17.2 Bcf in 1997 to 14.5 Bcf in 1998.Exports, which reached 53.1 Bcf, increased 38% over the previousyear’s level. Over half of the export volume was shipped throughthe Samalayuca Pipeline, a 45-mile, 24-inch pipeline that opened onDec. 20, 1997 and transports gas from El Paso’s Hueco CompressorStation to Mexican markets at the border crossing near Clint, TX.In the fourth quarter alone, this pipeline exported 10.5 Bcf toMexico. Like the Canadian situation, however, low prices inhibitedprofit-making, as the weighted average price of U.S. exports toMexico hit a three year low of $2.02/ MMBtu. The report waspublished in late March. The DOE’s Office of Fossil Energy andOffice of Natural Gas &amp Petroleum Import and Export Activitiescontributed to it.

John Norris

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