Get your 5-cent natural gas, right here in Canada
By Scott DiSavino
(Reuters) - For a brief moment this week, Canadian natural gas was basically free.
While oil producers fretted over what production shut-ins, caused by a massive Alberta wildfire, would do to the price of Canadian crude oil, those same producers are big buyers of natural gas, and without them the price dropped to just C$0.05 per thousand cubic feet (mcf) on Monday. A shut-in is when the product is available but not able to reach the market.
"It was essentially free at the lows on Monday," said Martin King, an analyst at Alberta energy advisory FirstEnergy Capital, noting that these were the lowest AECO prices on record going back to at least 1985.
Oil sands companies around the Canadian energy center of Fort McMurray, Alberta, began to restart operations on Tuesday after the wildfire forced a week-long shutdown.
During the wildfire shutdowns, producers were not using gas to fuel cogeneration power plants that generate electricity and the steam used to cook the oil sands to produce crude.
As a result, the Canadian benchmark AECO hub in southeast Alberta averaged less than C$0.50/mcf on Monday, at one point dropping to an intraday low of just 5 cents, King said.
Natural gas prices have rebounded somewhat. With the return to production of one oil sands cogeneration plant at the Syncrude project this week and the expected restart of others in coming days, AECO prices have already climbed to around C$1/mcf.
But the high level of gas in storage after a mild winter means prices are expected to remain relatively cheap for the rest of the year, according to analysts. Continued...