Page 7 - NorthAmOil Annual Review 2021
P. 7
NorthAmOil PERFORMANCE NorthAmOil
Deep freeze disrupts Canadian
operations, raises prices
WESTERN A deep freeze in Canada is disrupting oil and gas caused heating demand to rise, which helped to
CANADA operations and leading to increased commodity push up gas prices.
prices. The conditions were expected to persist at Spot natural gas prices at the AECO hub
least until January 7. in Alberta rose above CAD5 per gigajoule
Alberta, Canada’s main oil-producing prov- ($103.79 per 1,000 cubic metres), their highest
ince, was under an “extreme cold” warning this since October 2021, trading at a premium ver-
week, with temperatures forecast to drop below sus US benchmark Henry Hub. This was notable
-40 Celsius in places. While Western Canada is because AECO gas usually trades at a discount
habitually cold at this time of year, temperatures to US gas. TC Energy’s
have been even lower than usual. “This is depleting storage much quicker than
This has led to disruptions to oil and gas we have really seen before,” a Raymond James Keystone
operations. TC Energy’s Keystone pipeline, analyst, Jeremy McCrea, was quoted by Reu-
which carries crude from the oil sands in ters as saying. “That [premium] says we are try- pipeline, which
Alberta to the US Midwest, briefly shut down ing to keep as much gas in Western Canada as
on January 4, with operations resuming the possible.” carries crude
next day. The pipeline has the capacity to carry McCrea added that Western Canadian stor- from the oil
590,000 barrels per day (bpd). The company age inventories were approaching their lowest
said its staff had been challenged by extremely levels in five years. sands in Alberta
cold temperatures affecting oil flows through its The cold snap had persisted for more than
Hardisty terminal. two weeks but was anticipated to ease over the to the US
Elsewhere in Canada, malfunctioning equip- weekend of January 8-9. It also affected oil and
ment also affected oil and gas production. Out- gas operations in the Northern US, notably in Midwest, briefly
put slowed in regions including the oil sands, North Dakota’s Bakken play. This sent local oil shut down on
which account for the majority of Canada’s crude prices to their highest level since November and
production. came at a time when US crude stockpiles have January 4.
“Because of exposure you can’t send oper- also been dwindling, and approaching the three-
ators out in the field, vehicles don’t work well, year low they hit in September.
everything is just a drag. You don’t get great These trends are seen as supporting predic-
production,” one industry source was quoted by tions that the oil market will return to a deficit
Reuters as saying. this year as demand grows while producers
At the same time, the low temperatures struggle to maintain necessary supply levels.
Week 01 06•January•2022 www. NEWSBASE .com P7
