Canadian natural gas prices at the AECO hub in Alberta dropped by the most this week in almost two years as pipeline maintenance prevented some gas from flowing out of the region.
Next-day prices at AECO dropped from $2.54 per million British thermal units (mmBtu) on Tuesday to $1.41 on Wednesday, their lowest since October 2020, before edging up to $1.44 on Thursday.
That 45% drop was the contract’s biggest daily percentage decline since September 2019.
Analysts at data provider Refinitiv said Canadian energy company TC Energy Corp’s NOVA Gas Transmission Ltd (NGTL) unit started maintenance work this week on a compressor station near the Berland River in Alberta.
Refinitiv said that work likely caused a capacity constraint that caused prices to fall and noted there would likely be continued volatility on AECO prices for as long as maintenance work keeps constricting and unconstricting capacity.
Analysts at Tudor, Pickering, Holt and Co (TPH), a financial adviser, also said the price move was driven by NGTL maintenance.
TPH noted available capacity in NGTL’s Upstream James River (USJR) area dropped to 10.4 billion cubic feet per day (bcfd) on Tuesday versus receipts as high as 10.6 bcfd over the past weekend.
Officials at TC Energy were not immediately available for comment.
TPH said maintenance was expected to wrap up as early as Sunday, which should allow AECO prices to rise again.
TPH said NGTL was planning another round of maintenance that would limit capacity to around 10.6 bcfd from Sept. 7-Oct. 4. After that, TPH said, capacity would likely rise toward 11.7 bcfd in the fourth quarter from 11.2 bcfd prior to the recent slate of work.
One billion cubic feet can power about 5 million U.S. homes for a day.