Surging gas production receipts on NGTL pipeline system might weaken AECO

摘要

Surging Western Canadian production poses a risk to create congestion on the NGTL pipeline system, which could lead to weaker AECO prices than the market expected. Production in Western Canada has been exceptionally strong in June, averaging 12.1 Bcf/d June 5-18, according to data by S&P Global Platts Analytics. Production is up about 400 MMcf/d in West Canada as a whole since late last week, which Platts estimates equates to about 300 MMcf/d of incremental production on NGTL. This could mean more NGTL congestion and weaker AECO pricing this summer than both Platts Analytics and the market were expecting. Production in Western Canada typically slows from June through September timeframe, due to the effects of the spring break up as melting snow and muddy roads create poor drilling conditions.