New Incentive Rate Boosts Flows from Western Canada, Prices
Initial deliveries of gas under an incentive rate from the Canadian province of Alberta to the Dawn trading hub in the eastern Canadian province of Ontario saw gas flows out of western Canada sharply higher and a revival of prices at the AECO/NGX trading hub in Alberta, investment bank GMP FirstEnergy said in its November 6 Weekly Canadian Natural Gas Supplement.
Natural gas deliveries on the TransCanada Mainline system using the Dawn long-term fixed price (LTFP) incentive rate approved by Canadian regulator National Energy Board in September helped boost flows out of Alberta by about 750mn ft³/day, Martin King, GMP FirstEnergy’s director of institutional research said in the report. That puts flows at about 3.5bn ft³/day, King said, close to a three-year high.
“With the additional gas supplies flowing to the Dawn Hub from Alberta and colder temperatures across the country, especially in the west, gas supplies in Alberta are seeing strong demand, combined with respectable storage withdrawals,” he wrote. “This combination of events means that supplies are not backing up in the marketplace and AECO prices have climbed out of their premature grave.”
The spot price at western Canada gas hub AECO averaged C$1.793/'000 ft³ in the week ended November 3, up about $0.70/'000 ft³ the week before, but well below the $2.81/'000 ft³ average a year ago.
Dale Lunan