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Pipeline rupture in Canada roils Pacific Northwest natural gas prices


Gas flows to Sumas fall to zero

Power markets also feel the pinch

Houston — Prices in several commodity markets in the Pacific Northwest were affected after a pipeline rupture in British Columbia cut natural gas flows to the south by almost 1 Bcf, bringing a bullish sentiment to the region Wednesday.

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A rupture occurred in BC Pipeline's T South system near Prince George on Tuesday, cutting all flows from CS4B to Huntingdon, which is on the Canadian side of the border across from the Sumas, Washington, hub.

According to Westcoast Energy, flows on the pipeline were expected to be cut through Thursday. Northwest Pipeline subsequently declared force majeureat Sumas Wednesday.

Month-to-date average flows from Western Canada to the Northwest through the Northwest pipeline system at Sumas have averaged 945 MMcf/d, according to S&P Global Platts Analytics data.

With no gas moving through Sumas, no deals were seen on Intercontinental Exchange Wednesday. At other major hubs in the Pacific Northwest, however, prices jumped.

Gas Transmission Northwest Kingsgate climbed 36 cents to $3.16/MMBtu and GTN Stanfield rose 35 cents to $3.32/MMBtu.

The pipeline's rupture sent reverberations to markets upstream of the event as well, with gas in the West Coast Station 2 area left mostly stranded.

On ICE, West Coast Station 2 gas traded as low as 50 Canadian cents/Gj, with a volume weighted average of around 77.5 Canadian cents/Gj, which is a drop of C$1.28/Gj day on day, the largest day-on-day decline since November 3, 2017.


The cut in flows also had a bullish effect on power markets in the Pacific Northwest.

After averaging in the low $30s/MWh month to date, Washington's Mid-Columbia pricing point on-peak day-ahead jumped $72 to trade in the low $100s/MWh for Thursday delivery. Mid-Columbia off-peak day-ahead rose by $30.50 and traded in the low $60s/MWh.

The last time Mid-C on-peak day-ahead rose above $100 during October was in 2007, boosted by California nuclear outages.

In response to the pipeline rupture, Puget Sound Energy, which serves the Seattle area, posted a notice on its website asking customers to conserve gas and electricity.

PSE said there was no damage to its system, but that its ability to supply natural gas may be interrupted. The company also noted that it planned to switch natural gas generators to alternate fuel sources.

With hydro generation waning as the water year ends and natural gas availability limited, Northwestern power providers had to scramble Wednesday to obtain supply, driving prices up across the West.

In California, SP15 on-peak day-ahead traded at $61.20/MWh Wednesday, compared with a month-to-date average in the upper $30s/MWh. In Northern California, NP15 day-ahead traded in the mid-$70s/MWh, up $32 day on day.

According to Canada's CTV News, the pipeline rupture led to a massive blaze. Residents of Prince George were evacuated, but allowed to return to their homes a few hours later.

No injuries or damage to surrounding properties or structures were reported.

-- John Delapp,

-- Eric Janssen,

-- Jason Lord,

-- Kelli Ainsworth,

-- Edited by Annie Siebert,