Pipe­line ex­plo­sion strands nat­u­ral gas out­put and cuts into well­head prices

Penticton Herald - - FRONT PAGE -

CAL­GARY — A pipe­line ex­plo­sion in B.C. on Tues­day is in­ter­rupt­ing nat­u­ral gas de­liv­er­ies and cut­ting into the cold weather price bonus Cana­dian gas pro­duc­ers had been en­joy­ing for the past few weeks.

More than 1.6 bil­lion cu­bic feet per day — roughly 10 per cent of West­ern Canada’s daily nat­u­ral gas out­put — was stranded when En­bridge Inc. halted trans­port on the 36-inch line that ex­ploded near Prince George and on its neigh­bour­ing 30-inch line.

The Na­tional En­ergy Board al­lowed En­bridge to restart the smaller line at a lower pres­sure, but an­a­lysts say that still leaves be­tween 600 mil­lion and 800 mil­lion cu­bic feet per day of gas with­out an easy path to mar­ket.

“There are not a lot of other routes for gas to reach Van­cou­ver or for ex­port,” said Ian Archer, as­so­ciate di­rec­tor for IHS Markit, point­ing out about one bil­lion cf/d of the nor­mal daily pay­load is headed for ex­port into Washington.

“It was the main­line that went out. So I would as­sume this is En­bridge’s ab­so­lute No. 1 pri­or­ity to get fixed.”

Prices at the main in­te­rior B.C. trad­ing hub have crashed to about $1 per thou­sand cu­bic feet from around $2.60 be­fore the in­ci­dent, said com­mod­ity an­a­lyst Martin King of GMP First-En­ergy.

“For those that can get gas out, prices at Sta­tion 2 have come down quite a bit be­cause the line break is south of the trad­ing point,” said King, adding pro­duc­ers who can’t get their gas out will have to shut down their wells.

Some B.C. gas is be­ing redi­rected into Al­berta mar­kets, Archer said, caus­ing prices there to slip from around $2.50 per gi­ga­joule (an en­ergy unit that’s sim­i­lar in size to 1,000 cu­bic feet) to just over $2.

The an­a­lysts say they ex­pect En­bridge will re­store the pipe­line to ser­vice within a week or two, given the lack of dam­age to the par­al­lel line and the high pri­or­ity of restor­ing gas to res­i­den­tial mar­kets in B.C. at the be­gin­ning of win­ter.

Al­berta and B.C. gas prices had jumped in re­cent weeks thanks to more de­mand be­cause of un­usu­ally cold weather in Al­berta.

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