Against all expectations, the 2014-2015 winter was even colder than the preceding one. However, the market reacted much less strongly. Why?
Firstly, although it was a very cold winter in the Northeast , the West had a much milder one. Globally, the average temperature was much warmer on all the continent this year than it was in the previous one.
Even though January and February 2015 were extremely cold, this had little effect on natural gas prices since stock levels were sufficient to meet demand until the end of the season. The 6% increase in natural gas production in the United States in 2014 also contributed to reassuring markets.
Natural gas prices at the principal Canadian exchange hubs were thus very low last winter: CAN$2.91/GJ at AECO, CAN$3.08/GJ at Empress, and CAN$4.33/GJ at Dawn. As for the futures market, the prices indicated for summer 2015, as of March 31, 2015, were CAN$2.55/GJ at AECO, CAN$2.72/GJ at Empress, and CAN$3.39/GJ at Dawn.
Johanne Paquin, Senior Economist
This decision resulted from a process the NEB began in 2008 aimed at setting up a collection and set-aside mechanism for funds related to the discontinuance of pipeline operations. The NEB thus instructed all pipeline companies subject to its regulations to establish an estimate of the total costs of discontinuing operating activities in order to recuperate them from all network users.
Pierre Habre, Senior Advisor, Regulations
For all these reasons, the NEB had to authorize some variations in the composition of natural gas transported by TCPL. These variations, covered by standards set by the NEB, refer to what is called the “interchangeability” of natural gas (NEB Resolutions 09.2008 and 10.2008).
For more details, please consult Section 5.5 of the TCPL General Terms and Conditions.
The variations in the composition of natural gas are measured by chromatographs in order to determine the calorific value. An upward trend has been observed for several months by some of our customers; this phenomenon is explained in part by the diversification of procurement sources for the natural gas, which in the past came mostly from Empress in Alberta. The natural gas from the new sources has a higher calorific value.
TCPL always assures the quality of the natural gas it transports on its network. Thus, as is explained on Page 13 of the TCPL General Terms and Conditions, this calorific value must always be between 36.00 MJ/m3 and 41.34 MJ/m3 at the various delivery and reception points.
Guillaume Laprise, Senior Advisor, Gas Procurement