After severe setbacks in the 2008-2009 financial and industrial contraction, North American natural gas trade has settled into a new pattern of stable-to-growing volumes with northbound flows from the United States into Canada on the rise, the U.S. Department of Energy said.

Canadian pipeline deliveries to the United States were 1.65 Tcf in the first half of 2011, according to records kept by the department’s Office of Natural Gas Regulatory Activities, which grants import and export permits then tracks their results.

Depending on who does the counting, southbound volume was either up or down marginally. The U.S. scorecard shows 1.6% shrinkage of imports from 1.68 Tcf in the first half of 2010. Canada’s National Energy Board (NEB), using slightly different reporting, registered the change as a 4% increase in pipeline exports to 1.66 Tcf in the first half of 2011 from 1.6 Tcf from the same period last year.

Either way, the performance is an improvement on severe shrinkage suffered by the gas trade during the 2008-2009 global economic contraction. Canadian pipeline deliveries into the United States shrank by 14% from their all-time peak annual volume of 3.8 Tcf in 2007 to 3.27 Tcf during 2010.

The view was radically brighter on the U.S. side of the international boundary. Over the recession period U.S. gas merchants succeeded at establishing a growth trend in exports to Canada, reversing the pattern of the previous two decades. U.S. pipeline exports to Canada jumped 36% to 493 Bcf in the first half of 2011 from 362 Bcf in the same period last year, the U.S. Energy Department’s record shows.

The U.S. gains in 2011 are building on a sustained trend. The NEB trade records book a 71% increase by annual pipeline imports into Canada from the U.S. to 800 Bcf in 2010 from 467 Bcf in 2007.

From the Canadian perspective the change in the trade looks much bigger when the yardstick takes into account the flows in both directions across the border. Annual net exports of Canadian gas to the United States during the economic crisis shrank by 26%, down to 2.47 Tcf, or an average of 7.6 Bcf/d, in 2010 from 3.34 Tcf, or an average of 9.1 Bcf/d, in 2007.

Canadian industry analysts attribute the pattern change to numerous factors, which they do not expect to go away any time soon.

Some pipeline deliveries into the United States are being re-exported back into Canada. Production capacity continues to run down in aging Alberta gas fields, where the natural geological trend is aggravated by a switch in drilling targets to oil while poor prices limit gas activity.

Domestic industrial gas consumption is on the rise in Canada, led by growth of Alberta oilsands projects, which increasingly use steam injection for in-situ, underground extraction of bitumen from deposits too deep for mining. And central Canadian buyers, from gas distributors to petrochemical plants, are developing a taste for new shale supplies from the eastern United States, which are much closer to them than their traditional Alberta mainstays.

TransCanada Corp. and Union Gas are advancing pipeline, storage and trading hub projects that cater to imports of U.S.-sourced production. The Ontario Energy Board has encouraged the trading pattern in the name of diversifying supplies and encouraging market competition.

Effects of the new pattern of more bidirectional gas traffic have emerged as a major issue in a complex pipeline rate case developing before the NEB on a proposed overhaul of finances and tolls for TransCanada’s Mainline from Alberta to Ontario, Quebec and export connections to the U.S. Midwest and Northeast.

Prices in the international gas trade continue to register the sales competition fostered by abundant supplies, according to the U.S. Energy Department’s records. Canadian exports to the United States fetched an average of only US$4.26/MMBtu at the border in the first half of 2011, down 11% from US$4.79 for the same period of 2010.

The average price received by U.S. exports into Canada dropped by 10% to US$4.60/MMBtu in the first half of 2011 from US$5.11 in the first six months of 2010.

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