Two Canadian natural gas producers on Sept. 12 said they had temporarily reduced production due to pipeline bottlenecks that led to a collapse in western Canadian gas prices in the second half of August.
Tourmaline Oil, Canada’s largest gas producer, cut its third-quarter output by 1.5%, or 7,500 boe/d, although its full-year production guidance remains unchanged at 507,000 boe/d.
Kelt Exploration Ltd. reduced its full-year 2022 production forecast by 1,500 boe/d to around 29,000 boe/d.
Spot natural gas prices at the AECO hub in western Canada tumbled last month and briefly turned negative as maintenance on TC Energy’s NGTL pipeline system cut capacity, leaving gas stranded in Alberta and at the Station 2 hub in British Columbia.
“The company shut-in significant gas volumes on certain days in both Alberta and British Columbia,” Kelt said in a statement.
The price collapse came amid a global surge in gas prices to record highs, as European countries scrambled to replace Russian supplies.
Spot Canadian gas traded at $2.248 per MMBtu at AECO on Sept. 9, having recovered from the August lows. However, Kelt warned there could be more AECO volatility through September and October as further maintenance on the NGTL system is completed.
Calgary, Alberta-based Tourmaline shut in approximately 100 MMcf/d of existing production and delayed the startup of several new drilling pads from August to September or October. The company also scheduled facility turnarounds and hedged more gas volumes than usual during August.
RBC Capital Markets analyst Michael Harvey described Tourmaline’s move as “reshuffling production,” and said Kelt’s shut-in was “a prudent move in the face of lower temporary gas prices.”
Tourmaline shares were last up 2.8% on the Toronto Stock Exchange at CA$79.99, while Kelt shares were down 0.8% at CA$6.33.
Recommended Reading
Exclusive: Building Battery Value Chain is "Vital" to Energy Transition
2024-04-18 - Srini Godavarthy, the CEO of Li-Metal, breaks down the importance of scaling up battery production in North America and the traditional process of producing lithium anodes, in this Hart Energy Exclusive interview.
High Interest Rates a Headwind for the Energy Transition
2024-04-18 - Persistent high interest rates will make transitioning to a net zero global economy much harder and more costly, according to Wood Mackenzie Head of Economics Peter Martin.
Scotland Ditches 2030 Climate Target to Cut Emissions by 75%
2024-04-18 - Scotland was constrained by cuts to the capital funding it receives from the British government and an overall weakening of climate ambition by British Prime Minister Rishi Sunak, said Mairi McAllan, the net zero secretary for Scotland's devolved government.
Exclusive: Mitsubishi Power Plans Hydrogen for the Long Haul
2024-04-17 - Mitsubishi Power is looking at a "realistic timeline" as the company scales projects centered around the "versatile molecule," Kai Guo, the vice president of hydrogen infrastructure development for Mitsubishi Power, told Hart Energy's Jordan Blum at CERAWeek by S&P Global.
Google Exec: More Collaboration Needed for Clean Power
2024-04-17 - Tech giant Google has partnered with its peers and several renewable energy companies, including startups, to ramp up the presence of renewables on the grid.