In the News: Canaport LNG Undergoing Maintenance.
Canaport LNG, an LNG import terminal located in St. John, New Brunswick, Canada, began planned maintenance on May 1. Most of the natural gas delivered from the terminal is transported to the United States via pipeline. The maintenance is expected to last up to 16 days, and since it began, flows have been negligible. The maintenance on the terminal’s compression system is expected to reduce emissions from the site.
The reduction in flows from Canaport since the beginning of the month underlies the substantial decrease in Canadian pipeline imports to the Northeast this week compared to last week, according to data from BENTEK Energy LLC (Bentek). Additionally, before the planned maintenance, flows from Canaport were at a reduced level, accounting for part of a year-over-year decrease in net imports to the Northeast in 2012. Reduced net pipeline imports from Canada to the Northeast is likely the result of both the warm 2011-2012 winter, which reduced demand for natural gas for space heating, and the reduced LNG shipments to Canaport. Comparatively low North American natural gas prices have likely contributed to a decline in LNG imports (as cargoes can receive higher prices in other markets). This has also affected the Everett LNG terminal in New England, where imports have declined this year.
At the NYMEX, the June 2012 contract rose from $2.253 per MMBtu last Wednesday to $2.465 per MMBtu yesterday, an increase of 21.2 cents per MMBtu (9.4 percent). With the exception of a 3 percent drop on Friday, the contract rose steadily over the week. The 12-Month Strip (average of June 2012 through May 2013 contracts) followed a similar pattern with a 19.5 cent per MMBtu (6.8 percent) increase for the week.
With the exception of a strong gain yesterday, movement in the Henry Hub day-ahead price reflected a relatively flat cash market over the week. The price fluctuated between $2.27 and $2.31 per MMBtu between last Wednesday and this Tuesday and then gained 9 cents yesterday to close the week at $2.36 per MMbtu (up 2.2 percent).
Nearly all downstream trading locations showed daily single-digit price fluctuations for all but the last day of the report week. The Rocky Mountain Region was the exception, with many locations registering double digit drops last Thursday, due in part to a Kern River pipeline outage. After dropping almost 20 cents per MMBtu last Thursday, both the Kern River and Opal pricing points quickly recovered, with both points finishing the week up 5 cents per MMBtu (2.4 percent). Spot prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City, which started the week at $2.58 per MMBtu, dropped 12 cents per MMBtu over the week to close at $2.46 per MMBtu (down 4.7 percent). Over the same period, the Chicago citygate spot price registered a 6 cent per MMBtu gain (from $2.32 per MMBtu last Wednesday), ending the week at $2.38 per MMBtu (up 2.6 percent).