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Supply Glut Pressuring Canada Natural Gas Prices as LNG, Domestic Demand Slowly Ramp

Natural Gas Intelligence · last updated

Immense oversupply of natural gas in Western Canada has outweighed any bullish price impacts of the country’s nascent LNG export industry, but that dynamic could change over the coming years, according to industry experts. .

chart showing NGI's NOVA/AECO C forward natural gas price

The Shell plc-led LNG Canada liquefaction terminal in Kitimat, British Columbia (BC), sent out its first cargo on June 30, offering a long-awaited outlet for Western Canadian Sedimentary Basin (WCSB) molecules. Prices at the NOVA/AECO C hub in southern Alberta routinely trade at a discount to U.S. benchmark Henry Hub because of chronic oversupply in the basin and insufficient pipeline capacity to more lucrative markets.

“I mean, of course it’s a huge positive,” Liberty Energy Inc. CEO Ron Gusek told NGI in reference to LNG Canada entering service. “I don’t think that alone is going to move the needle on AECO differentials.

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