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Deep freeze offers only cold comfort for natural gas producing firms

CALGARY — Analysts say the cold snap that continues to blanket many parts of North America is driving short-term natural gas prices higher but the trend is unlikely to significantly affect either Canadian consumer bills or producer profits.
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CALGARY — Analysts say the cold snap that continues to blanket many parts of North America is driving short-term natural gas prices higher but the trend is unlikely to significantly affect either Canadian consumer bills or producer profits.

Cold weather typically increases demand for the home heating fuel, which draws down storage levels and pushes prices higher, but the affect is being blunted this year because North America is awash in gas from U.S. and Canadian shale wells.

Gerry Goobie, a principal with Calgary-based consulting company Gas Processing Management Inc., says higher prices are generally passed through to consumers but the distribution companies that buy the gas have long-term contracts to mitigate price spikes and can draw from storage to handle higher demand. 

GMP FirstEnergy commodity analyst Martin King says U.S. prices have recently rallied to about $3 per million British thermal units, but points out similar cold weather events in previous years would likely have resulted in prices spiking into the US$4 or US$5 per mmBTU range.

King says Western Canada gas production fell by as much as two billion cubic feet per day on some days in the last week of December due to supply interruptions caused by extreme cold weather that froze gas well production equipment.

 

The Canadian Press