Canada

Because trading was for Monday-only deliveries, when most of the U.S. and Canada could anticipate a return of colder weather after some moderation during the holiday weekend, prices were up at most points Wednesday. The timing also allowed the cash market to ignore a 44.1-cent plunge by January futures a day earlier.

Forecasts of weekend low temperatures ranging from the 20s to 40s in Canada and most of the Lower 48 states would seem like a prescription for higher spot prices, right? But the cash market paid more heed Friday to the previous day’s 27-cent futures decline and the weekend drop of industrial load in falling at most points, bringing last week’s bull run to an end.

BP Canada Energy Marketing Co. and Secure Energy Inc. have struck a long-term natural gas sales agreement whereby BP will purchase up to 67 MMcf/d of gas from the proposed Secure Energy Decatur Gasification Plant to be built in Illinois once the plant becomes operational. Secure Energy will have the option to separately sell gas to industrial customers in the Decatur, IL, area for a portion of its production, and BP has agreed to purchase any gas not sold locally. The Decatur plant would convert 1.4 million tons of high-sulfur Illinois coal into more than 20 Bcf of gas each year. The projected plant construction cost is estimated to be $550 million. The plant is expected to be in operation in the summer of 2011.

Shell Canada Ltd. completed its acquisition of Canadian-based Duvernay Oil Corp., which gives the Royal Dutch Shell plc subsidiary half a million net acres in the Western Canadian Sedimentary Basin (WCSB). Shell announced the C$5.9 billion cash transaction in July (see Daily GPI, July 15). Shell gained around 1,800 square kilometers (450,000 acres) in the WCSB from the deal, including acreage in the emerging Montney tight gas trend in northeastern British Columbia BC). Two large gas projects are located in BC-based Sunset-Groundbirch, and in a deeper, western portion of the WCSB. The transaction also gives Shell some natural gas processing and delivery infrastructure in the WCSB. Prior to the purchase, Shell’s North American assets were producing about 80,000 boe/d of tight gas in the Pinedale Anticline of Wyoming, in South Texas and the WCSB. Shell also has acreage in the Haynesville Shale of Louisiana.

The midweek buildup of heat in many sections of the U.S. and Eastern Canada was able to overcome further prior-day screen softness in spurring rebounds in most of the cash market Thursday. However, it’s highly unlikely that gains will continue Friday after a very bearish storage report led to a steep plunge in August natural gas amid another meltdown day in Nymex’s energy futures complex.

Shell Canada Ltd. offered to pay Duvernay Oil Corp. C$5.9 billion in cash in a bid to acquire half a million net acres in the Western Canadian Sedimentary Basin (WCSB), which includes acreage in the emerging Montney tight gas trend of northeastern British Columbia.

A plan to pipe treasured Alaskan North Slope gas reserves through Canada to Lower 48 markets would put the state’s gasline destiny in the hands of foreigners, a former Alaska governor said last week in denouncing a proposal before the state’s legislature to allow TransCanada Corp. to develop the gasline.

A plan to pipe treasured Alaskan North Slope gas reserves through Canada to Lower 48 markets would put the state’s gasline destiny in the hands of foreigners, a former Alaska governor said Thursday in denouncing a proposal before the state’s legislature to allow TransCanada Corp. to develop the gasline.

Western spikes led an overall rally by the cash market Monday as cooling load was ample in Eastern Canada and much of the U.S. The previous Thursday’s 18.8-cent gain by August futures and the return of industrial demand from a long holiday weekend absence were also bullish factors.