US Northeast boosts imports of Canadian gas amid pipeline constraints

By CHRISTINE BUURMA
Bloomberg

When it comes to importing natural gas from Canada, the US Northeast is the exception to the rule.

Cold weather and pipeline bottlenecks mean the region’s appetite for supply from the Great White North hasn’t diminished, even as shale output pushes US gas production to a fifth straight annual record. Canadian gas deliveries to the Northeast will climb 16% in the seven days ending Nov. 6 from a week earlier, while shipments via pipeline to the Midwest and Northwest will drop, according to Energy Aspects.

Imports to the US from Canada declined for the four years through 2014. The Northeast has been an outlier because pipeline constraints make it difficult to ship adequate supplies to the region from within the US, especially in the colder months, when heating demand is highest. Meanwhile, slumping Canadian prices are driving producers there to seek customers south of the border.

“Prices in the Boston region spiked up last week and remain high due to some pipeline constraints,” said Alex Tertzakian, an analyst at Energy Aspects in London. “Some colder temperatures over the Halloween weekend may have also encouraged more imports.”

Gas at the Algonquin City Gates hub, which serves Boston, traded at a premium of $4.6484/MMBtu to prices at Alberta’s AECO hub on Oct. 26, the highest since March. Algonquin gas dropped 4.9% to $3.90 on Wednesday, while supply at AECO rose 1% to $1.97. The low temperature in Boston dropped to 38 degrees Fahrenheit (3 Celsius) on Oct. 27, 5 below normal, AccuWeather data show.

Spectra Energy is conducting maintenance on a segment of its Algonquin pipeline, which connects gas supplies from the US Gulf Coast to markets in New England, New York and New Jersey. Algonquin issued an operational flow order last week, requiring deliveries of gas out of the system to be less than or equal to scheduled quantities.

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