SnapChart – The AECO Price Recovery

AECO experienced some volatile price swings throughout the summer, and into autumn of 2017.This came as the result of maintenance outages on the TransCanada NOVA system, which limited exports and reduced access to natural gas storage caverns.

The outages caused significant price discounts, with intraday prices even falling into negative territory on a few occasions. The average AECO price for the third quarter came in at only $C 1.56/GJ. Over the past few weeks however, the price has recovered and is now averaging closer to $C 2.50/GJ.

Since the start of November, stabilizing forces for AECO price include: an early blast of winter in Western Canada which increased domestic demand; the conclusion of maintenance work on the NOVA system; and increased export flows on the TransCanada Mainline.

This week’s SnapChart shows the change in TransCanada’s Mainline flows over the past few weeks; flowing an average of about 0.6 Bcf/d higher since November 1st.  The increased volumes are the result of new long-term contracts for shipping gas from Alberta to Ontario’s Dawn hub. Producers who signed-up to the new agreements are shipping gas to Eastern Canada at half the cost of the previous tolls, giving them a competitive boost in Eastern Markets.