Two Canadian natural gas producers on Sept. 12 said they had temporarily reduced production due to pipeline bottlenecks that led to a collapse in western Canadian gas prices in the second half of August.
Tourmaline Oil, Canada’s largest gas producer, cut its third-quarter output by 1.5%, or 7,500 boe/d, although its full-year production guidance remains unchanged at 507,000 boe/d.
Kelt Exploration Ltd. reduced its full-year 2022 production forecast by 1,500 boe/d to around 29,000 boe/d.
Spot natural gas prices at the AECO hub in western Canada tumbled last month and briefly turned negative as maintenance on TC Energy’s NGTL pipeline system cut capacity, leaving gas stranded in Alberta and at the Station 2 hub in British Columbia.
“The company shut-in significant gas volumes on certain days in both Alberta and British Columbia,” Kelt said in a statement.
The price collapse came amid a global surge in gas prices to record highs, as European countries scrambled to replace Russian supplies.
Spot Canadian gas traded at $2.248 per MMBtu at AECO on Sept. 9, having recovered from the August lows. However, Kelt warned there could be more AECO volatility through September and October as further maintenance on the NGTL system is completed.
Calgary, Alberta-based Tourmaline shut in approximately 100 MMcf/d of existing production and delayed the startup of several new drilling pads from August to September or October. The company also scheduled facility turnarounds and hedged more gas volumes than usual during August.
RBC Capital Markets analyst Michael Harvey described Tourmaline’s move as “reshuffling production,” and said Kelt’s shut-in was “a prudent move in the face of lower temporary gas prices.”
Tourmaline shares were last up 2.8% on the Toronto Stock Exchange at CA$79.99, while Kelt shares were down 0.8% at CA$6.33.
Recommended Reading
Crescent Energy Closes $905MM Acquisition in Central Eagle Ford
2025-01-31 - Crescent Energy’s cash-and-stock acquisition of Carnelian Energy Capital Management-backed Ridgemar Energy includes potential contingency payments of up to $170 million through 2027.
On The Market This Week (Jan. 27, 2025)
2025-01-31 - is a roundup of marketed oil and gas leaseholds in Appalachia and the Central Basin from select E&Ps.
Viper Buys $330MM Midland Interests in Shadow of $4.5B Dropdown
2025-01-31 - Viper Energy said that in addition to a $4.45 billion dropdown by Diamondback Energy, the company would also purchase royalty acreage in Howard County, Texas, for $330 million.
ONEOK Completes EnLink Midstream Takeover for $4.3B
2025-01-31 - ONEOK had agreed to acquire the remaining stake in EnLink in November 2024 for $4.3 billion after having acquired the controlling interest a month prior.
Ovintiv Closes Montney Acquisition, Completing $4.3B in M&A
2025-01-31 - Ovintiv closed its $2.3 billion acquisition of Paramount Resource’s Montney Shale assets on Jan. 31 after divesting Unita Basin assets for $2 billion last week.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.