Analysis: GTN maintenance to curb Canadian supply, pressure western US gas prices

New York — Summer-long maintenance on Gas Transmission Northwest, scheduled to begin on Tuesday, will limit Western Canadian gas supply available to markets in the western US, potentially putting upward pressure on hub prices in the region.

On Monday, cash prices at Northwest Wyoming Pool and the nearby Kern River Opal hub were up about 15 cents from Friday's settlement, both trading around $1.91/MMBtu.

Farther downstream at PG&E Malin, located on the Oregon-California border, prices were up 9 cents to around $1.97/MMBtu.

On the Canadian side of the border, the scheduled restriction put downward pressure on cash markets at AECO and West Coast Station 2 on Monday, both of which were off about C$ 26 cents to 27 cents/gj , from their prior settlement prices, preliminary data from S&P Global Platts showed.

From March 17 through the end of the current month, maintenance work on GTN will cut throughput capacity via Kingsgate to 2.23 Bcf/d – a roughly 300 MMcf/d reduction to standard operating capacity.

In April, throughput restrictions tighten to 2.19 Bcf/d, before easing to 2.21 Bcf/d in May, a maintenance schedule recently published by GTN showed.

Over the next two and one-half months, automation and yard piping modifications at GTN's Eastport Station 3 and Starbuck Station 7, likely come as the operator makes system modifications prior to startup of its West Path Delivery project, scheduled to enter service in June.

FLOWS

Month to date, throughput at Kingsgate on GTN has averaged about 2.45 Bcf/d, data from S&P Global Platts Analytics shows. An immediate cut to roughly 220 to 230 MMcf/d in Western Canadian gas supply flowing through Kingsgate should ease in the weeks ahead, though, as seasonal heating and power burn demand ebb amid rising temperatures.

Following startup of the West Path Delivery project in June, cross-border capacity on GTN is expected to rise by some 270 MMcf/d, boosting the pipeline's throughput capability at Kingsgate to 2.6 Bcf/d.

Combined with additional supply from Tallgrass' Cheyenne Connector project, expected to enter service by June, US Northwest gas markets should remain well supplied during the months of June and July.

Beginning July 20 and continuing through September 18, another planned restriction on GTN will again cut throughput capacity at Kingsgate to between 2.33 and 2.36 Bcf/d, the maintenance schedule shows.

During the latter maintenance period, though, year-on-year gains in cross-border capacity at Northwest Pipeline's Sumas hub, should allow an additional 250 MMcf/d in Western Canadian supply to reach western and Pacific Northwest gas markets this summer.