U.S. shale drillers eye bigger share of gas market

Shale drillers in the U.S. are about to tighten their grip on the global natural gas market.

TransCanada Corp.’s decision this week to shelve plans for lower tolls on its gas pipeline to Eastern Canada means less supply will head there from the country’s western reservoirs.

That opens the door for U.S. explorers to edge out Canadian competitors and ship more gas north of the border.

Canada is one of many new frontiers for the shale producers propelling the U.S. into the ranks of the world’s top gas suppliers.

Less than a decade after U.S. gas imports rose to a record, Citigroup Inc. data shows the country has become a net exporter of the fuel as cargoes head from the Gulf Coast on tankers to ports across the globe.

“This makes it a lot easier for U.S. producers, knowing their Canadian counterparts aren’t going to compete,” said Jihad Traya, a natural gas consultant for

This makes it a lot easier for U.S. producers, knowing their Canadian counterparts aren’t going to compete.

Solomon Associates in Calgary. Canadian drillers are “getting shut out of a market they might never get back.”

Drillers in Pennsylvania’s Marcellus basin, the biggest U.S. gas play, are poised to expand their reach in Canada’s population centres.

Calgary-based TransCanada halted plans to lower rates on its main line because there wasn’t enough interest from Western Canadian producers, the company said Tuesday. Those drillers now stand to lose even more market share to U.S. competitors, said Martin King, an analyst at GMP FirstEnergy in Calgary.

“More U.S. gas is going to be feeding into southern Canada,” King said.

The decision raises the odds the proposed Nexus pipeline or the Rover project will allow Marcellus gas to displace Canadian supplies, King said.

Gas for delivery in Alberta traded about 50 cents below the U.S. benchmark price on Wednesday.

Canadian explorers Pine Cliff Energy Ltd. and Paramount Resources Ltd. may be hit hardest if that gap widens, while Seven Generations Energy Ltd. may be shielded by its hedging program and capacity on the Alliance pipeline to the Midwest, Juan Jarrah, an analyst at TD Securities Inc., wrote Thursday.

While some Western Canadian producers are banking on a better pipeline deal from TransCanada, that offer may never come, Traya said.

“The industry in Western Canada is cutting off its nose to spite its face,” he said.