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Price of natural gas could climb higher still after cresting multi-year highs – CBC.ca

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The rising price of oil may grab most of the headlines, but another commodity — natural gas — is on an even wilder ride and expected to hit fresh highs this summer.

The war in Ukraine and resulting concerns about global energy security have driven up commodity prices world-wide. But where the price of oil is up about 85 per cent year-over-year, natural gas is up more than 200 per cent.

As of mid-day Friday, the U.S. natural gas benchmark Henry Hub price was trading around $8.75 US per million British thermal units, or MMBtu. It surged to a 14-year high of more than $9 earlier in the week, from less than $3 at this time last year.

“It’s like if oil went to $200 (per barrel), but it’s not getting the same kind of attention,” said Dulles Wang, a Wood Mackenzie analyst based in Calgary. “And I think there’s probably still more upside potential for natural gas prices.”

Driving the growth in prices are surging liquefied natural gas (LNG) exports from the U.S. Gulf Coast, aimed at helping to meet global demand for energy, along with low North American storage levels.

Consumers could see their bills for natural gas consumption, tracked by meters like the one above, climb above the 14-year highs seen earlier this week. (Kyle Bakx/CBC)

Part of the reason for the low inventory levels, said Robert Fitzmartyn, managing director and head of energy research at Stifel FirstEnergy in Calgary, is increased demand as regions such as Alberta phase out coal-fired power and replace it with natural gas.

Weather and worker shortages 

And the industry, which has gone through more than a decade of depressed prices prior to the current commodities boom and had to lay off many workers, is having a hard time keeping up.

“There’s limited labour availability to satiate elevated demand, so the price is going even higher,” Fitzmartyn said.

Natural gas prices are also heavily influenced by weather and the demand for heating and air conditioning. That means extreme heat this summer, as has been seen in North America in recent years, could spike prices higher, even above the $10 US mark.

In a recent report, the U.S. Energy Information Administration said that “natural gas prices could rise significantly above forecast levels if summer temperatures are hotter than assumed . . . and electricity demand is higher.”

While both Fitzmartyn and Wang are bullish on the outlook for natural gas, Wang said he expects prices will eventually come down as drillers slowly ramp up production capability to meet demand.

“I think if we can get past this summer with relatively normal weather, prices will have more downside potential after the winter of 2023,” Wang said.

Drilling expected to increase

Earlier this month, the Canadian Association of Energy Contractors — which represents contract drillers and well servicing companies — revised its 2022 drilling forecast from the 6,457 rigs it had projected in November of last year to 6,902.

The CAOEC also revised its employment projections for the sector upwards this month by 2,484 jobs to a total of 37,409.

Mark Scholz, president of the Canadian Association of Energy Contractors, said the producers who hire the drilling rig contractors don’t seem as willing to spend money as they were back in 2008, the last time natural gas prices surged. (CBC)

But CAOEC president Mark Scholz said the producers who hire the drilling rig contractors don’t seem as willing to spend money as they were back in 2008, the last time natural gas prices surged.

Instead, they are taking advantage of the high prices to repair their balance sheets, as well as offering share buybacks and dividends to appease investors.

“It’s a much better industry to be in today (than in recent years), but I wouldn’t say we’re growing at 110 km an hour,” Scholz said in an interview Friday. “It’s a gradual acceleration.”

Still, even a gradual acceleration is welcome news in Western Canada, which is home to the majority of the country’s natural gas production and has suffered through years of depressed commodity prices.

Scholz said there’s even more for industry to be optimistic about going forward, with Canada’s first LNG export facility (LNG Canada, currently under construction in Kitimat, B.C.) expected to come online in 2026.

“These are really exciting times, and I think it shows just how important gas is going to be, both in terms of Canada’s energy transition, and also the opportunity to export it internationally,” Scholz said.

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Carry On Canadian Business. Carry On!

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2 days ago

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October 22, 2024

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business to start in Canada

Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.

I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.

Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.

Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.

Steven Kaszab
Bradford, Ontario
skaszab@yahoo.ca

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Imperial to cut prices in NWT community after low river prevented resupply by barges

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October 22, 2024

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NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.

Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.

The air transportation increase, it further states, will be implemented over a longer period.

It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.

Gasoline and heating fuel prices approached $5 a litre at the start of this month.

Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.

“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.

The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.

“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.

Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.

Additionally, she said the government has donated $150,000 to the Norman Wells food bank.

In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.

It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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U.S. vote has Canadian business leaders worried about protectionist policies: KPMG

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October 22, 2024

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TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.

The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs

It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.

The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.

Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.

Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.

This report by The Canadian Press was first published Oct. 22, 2024.

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