Canada gas exports to U.S. decline

Gary Park

Petroleum News Calgary correspondent

After a string of 14 consecutive annual sales records, Canada’s natural gas exports to the United States are lagging, but producers continue to rake in healthy revenues. The National Energy Board reported that shipments for the first half of 2003 were 1.7 trillion cubic feet, off almost 8 percent from last year’s 1.84 tcf.

On the crude oil and petroleum products front, Canada was the leading supplier to the United States to the end of June and narrowed the gap on Mexico as the number two source of crude.

National Energy Board statistics showed Canadian exports were up 4 percent from a year earlier, largely fueled by rising oil sands and bitumen output, averaging 1.47 million barrels per day. With petroleum products at 510,000 bpd, Canada sent a total of 1.98 million bpd south of the 49th parallel, topping Saudi Arabia’s 1.93 million bpd.

But the Saudis led the way among crude oil suppliers at 1.87 million bpd, followed by Mexico at 1.5 million bpd, according to the U.S. Energy Information Administration.

The combined 2.97 million bpd from Canada and Mexico were almost one-third of the total U.S. imports of 9.3 million bpd.

Heavy crude exports topped 1 million bpd for the first time, accounting for about two-thirds of the total volumes, according to the board.

To the mid-point of 2003, heavy oil exports rose 7.6 percent to 944,100 bpd from 877,100 bpd in the same period of last year, with light crude slipping 8.5 percent to 503,900 bpd.

Revenues for Canada’s gas exports raced to C$13.92 billion from C$8.11 billion for the January-June period in 2002, with export prices climbing to C$7.73 per gigajoule (Canadian unit of heating value equivalent to approximately 95 percent of 1 million British thermal units) this year from C$4.10 last year.

June volumes took a sharp dip to 255.6 billion cubic feet from 290.2 bcf in June 2002 and 270.1 bcf in May, with every U.S. market in decline. The Midwest was off 9.1 percent, the Northeast 11.2 percent, the Pacific Northwest by almost 22 percent and California by 10 percent.

Exports have been down every month this year compared to 2002, when the full year’s shipments reached a record 3.76 tcf, up 413 percent from the 926 bcf in 1986, when exports started to soar.

An Energy Information Administration report said summer gas demand in the United States was off 2.6 percent from last year, reflecting cooler temperatures and the “effect of high natural gas prices on consumption in the industrial and electricity-generating sectors.”

For 2004, the agency is forecasting that U.S. demand will stay flat, partly because gas prices triggered a growth in oil-fired plat utilization.

Since 1997, U.S. industrial gas consumption has dropped by 3.5 bcf per day, according to Massachusetts-based Strategic Energy and Economic Research.