Pacific Northwest forward gas prices to face pressure as W. Canada storage mounts

摘要

The US Pacific Northwest could see significantly weaker gas prices than currently expected for next autumn as supply pressure from Western Canada mounts amid rapidly rising inventory levels there. At the Northwest Canadian border hub Sumas, forwards markets are currently pricing in considerable strengthening from current levels around $1.50/MMBtu to over $2 by October and the low $3s by November. Those forward valuations could come under significant pressure by later this summer, though, as Western Canadian storage levels approach tank top, driving more supply southbound to export markets in the PNW and beyond. Over the past 30 days, storage injections on Alberta’s Nova Gas Transmission system have averaged nearly 1.5 Bcf/d, outpacing the five-year average build of 695 MMcf/d by over two fold, S&P Global Platts Analytics data shows. Abnormally high injection demand comes after TransCanada announced a Temporary Service Protocol effective April 1, incentivizing shippers to store regional production in an effort balance Western Canada’s chronically oversupplied market. As a result, gas inventories are now rapidly filling, rising to an estimated 357 Bcf on June 10. Regional storage is now over 50 Bcf above year-ago levels and has narrowed its deficit to the five-year average to just 32 Bcf – down from a nearly 90 Bcf shortfall at the start of the injection season.