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.
NEW GLASGOW, N.S. – Police in New Glasgow, N.S., say a 44-year-old woman faces fraud charges after funds went missing from the Pictou East Progressive Conservative Association.
New Glasgow Regional Police began the investigation on Oct. 7, after Nova Scotia Premier Tim Houston reported that an undisclosed amount of money had gone missing from his riding association’s account.
Police allege that a volunteer who was acting as treasurer had withdrawn funds from the association’s account between 2016 and 2024.
The force says it arrested Tara Amanda Cohoon at her Pictou County, N.S., residence on Oct. 11.
They say investigators seized mobile electronic devices, bank records and cash during a search of the home.
Cohoon has since been released and is to appear in Pictou provincial court on Dec. 2 to face charges of forgery, uttering a forged document, theft over $5,000 and fraud over $5,000.
Police say their investigation remains ongoing.
Houston revealed the investigation to reporters on Oct. 9, saying he felt an “incredible level of betrayal” over the matter.
The premier also said a volunteer he had known for many years had been dismissed from the association and the party.
This report by The Canadian Press was first published Oct. 23, 2024.
PICTOU, N.S. – A Nova Scotia excavation company has been fined $80,000 after a worker died when scaffolding collapsed on one of its job sites.
In a decision released Wednesday, a Nova Scotia provincial court judge in Pictou, N.S., found the failure by Blaine MacLane Excavation Ltd. to ensure scaffolding was properly installed led to the 2020 death of Jeff MacDonald, a self-employed electrician.
The sentence was delivered after the excavation company was earlier found guilty of an infraction under the province’s Occupational Health and Safety Act.
Judge Bryna Hatt said in her decision she found the company “failed in its duty” to ensure that pins essential to the scaffolding’s stability were present at the work site.
Her decision said MacDonald was near the top of the structure when it collapsed on Dec. 9, 2020, though the exact height is unknown.
The judge said that though the excavation company did not own the scaffolding present on its job site, there was no evidence the company took steps to prevent injury, which is required under legislation.
MacDonald’s widow testified during the trial that she found her husband’s body at the job site after he didn’t pick up their children as planned and she couldn’t get in touch with him over the phone.
Julie MacDonald described in her testimony how she knew her husband had died upon finding him due to her nursing training, and that she waited alone in the dark for emergency responders to arrive after calling for help.
“My words cannot express how tragic this accident was for her, the children, and their extended family,” Hatt wrote in the sentencing decision.
“No financial penalty will undo the damage and harm that has been done, or adequately represent the loss of Mr. MacDonald to his family, friends, and our community.”
In addition to the $80,000 fine, the New Glasgow-based company must also pay a victim-fine surcharge of $12,000 and provide $8,000 worth of community service to non-profits in Pictou County.
This report by The Canadian Press was first published Oct. 23, 2024.
ST. JOHN’S, N.L. – Investigators found the remains of a 77-year-old American man on Wednesday at the scene of a fire that destroyed a hotel in western Newfoundland on the weekend.
Eugene Earl Spoon, a guest at the hotel, was visiting Newfoundland from Kansas. His remains were found Wednesday morning during a search of the debris left behind after the fire tore through the Driftwood Inn in Deer Lake, N.L., on Saturday, the RCMP said in a news release.
“RCMP (Newfoundland and Labrador) extends condolences to the family and friends of the missing man,” the news release said.
Spoon was last seen Friday evening in the community of about 4,800 people in western Newfoundland. The fire broke out early Saturday morning, the day Spoon was reported missing.
Several crews from the area fought the flames for about 16 hours before the final hot spot was put out, and police said Wednesday that investigators are still going through the debris.
Meanwhile, the provincial Progressive Conservative Opposition reiterated its call for a wider review of what happened.
“Serious questions have been raised about the fire, and the people deserve answers,” Tony Wakeham, the party’s leader, said in a news release Wednesday. “A thorough investigation must be conducted to determine the cause and prevent such tragedies in the future.”
The party has said it spoke to people who escaped the burning hotel, and they said alarm and sprinkler systems did not seem to have been activated during the fire. However, Stephen Rowsell, the Deer Lake fire chief, has said there were alarms going off when crews first arrived.
This report by The Canadian Press was first published Oct. 23, 2024.
