The impact of rising U.S. shipments to Europe has had a ripple effect by raising demand for Canadian natural gas in the United States
U.S. natural-gas prices have hit their highest level in 14 years as North American producers scramble to replenish supplies with demand soaring and storage levels declining.
The combination of unprecedented demand and limited supply could mean high prices for natural gas for a sustained period stretching at least into 2023 in the cyclical industry, say producers and industry analysts. Given current trends, Canadian consumers could be in for sticker shock when they see their home heating bills later this year.
The U.S. futures contract for June delivery closed at US$8.06 per million British thermal units on Friday, compared with about US$2.70 in the spring of 2021. In the integrated continental market, Ontario and Quebec buy natural gas from Western Canada and the United States, while producers in British Columbia and Alberta pipe the fuel east to Central Canada and also south of the border.
For consumers, options vary from province to province when it comes to signing up with fuel marketers for fixed-priced plans versus staying with variable rates. Since natural-gas consumption plummets in the summer and soars in cold weather, most Canadian households won’t likely pay much attention to the impact of higher prices until the winter of 2022-23.
LNG dreams endure in Canada, given that spot prices for LNG in Europe and Asia are more than US$22 per million BTUs. Dave Humphreys, executive vice-president of operations at Birchcliff Energy Ltd. of Calgary, said Canada remains overly dependent on U.S. markets.Andy Mah, a member of the board of directors at Calgary-based Advantage Energy Ltd. and its former CEO, said he is optimistic about the prospects for Rockies LNG in British Columbia, despite the challenges.
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