U.S. consumption of Canada gas up 6 percent from 2004

Canadian natural gas exports to the United States posted a 6 percent gain to 661.5 billion cubic feet in January and February over a year earlier, according to the latest statistics from the National Energy Board.

Prices for the two months averaged US$6.13 and $6.12 per million British thermal units compared with $5.52 and $5.72 for the same months of 2004, as a result lifting exports revenues for the period to C$5.03 billion from C$4.73 billion.

Of the two largest markets, the U.S. Northeast showed a 10 percent increase in February to 102.8 bcf, more than offsetting a decline to the Midwest of 2.4 bcf to 132.4 bcf.

In its most recent short-term outlook, the Energy Information Administration has forecast a 2.1 percent rise in U.S. gas needs for 2005, up from the 1.7 percent it forecast in April.

For this year and next the EIA is counting on an average gas price of US$7 per thousand cubic feet, with the Henry Hub spot price in the $6.50-$7 per mcf range through summer.

However, the TD Bank Financial Group is slightly less optimistic, suggesting the consumption of gas in air conditioning and the volumes diverted to building up winter inventories will be “much less than in the past.”

—Gary Park