The price of natural gas may rise after the highest figures for many years CBC News:

Rising oil prices may cover most of the headlines, but another commodity, natural gas, is in the wild, and is expected to reach new heights this summer.

The war in Ukraine, and consequently global energy security concerns, have pushed up commodity prices around the world. But where the price of oil has risen by about 85 percent year on year, natural gas has risen by more than 200 percent.

As of mid-Friday, the US natural gas benchmark Henry Hub was trading at around $ 8.75 per million British thermal units, or MMBtu. At the beginning of the week, it rose to a 14-year high of more than $ 9, from less than $ 3 at this time last year.

“Oil seems to be going up to $ 200 a barrel, but it’s not getting the same attention,” said Dales Wang, an analyst at Wood Mackenzie in Calgary. “And I think there’s probably even more potential for the price of natural gas.”

Rising prices are boosting liquefied natural gas (LNG) exports from the Gulf Coast to meet global energy demand, as well as North America’s low storage reserves.

Consumers could see that their natural gas consumption bills, which fall behind in the above-mentioned meters, are rising from the 14-year high seen earlier this week. (Kyle Bakx / CBC)

Part of the reason for the low levels of reserves, says Robert Fitzmartin, head of energy research at Stifel FirstEnergy in Calgary, is the growing demand as regions like Alberta cut off coal and replace it with natural gas.

Weather պակաս staff shortage

And the industry, which has seen prices plummet through prices for more than a decade before the current boom, has had to lay off many workers with difficulty.

“There is limited access to labor to meet high demand, so the price is going up,” Fitzmartin said.

Natural gas prices are greatly affected by the weather, heating and air conditioning demand. This means that this summer’s extreme heat, as seen in North America in recent years, could push prices as high as $ 10.

In a recent report, the US Energy Information Administration said that “natural gas prices could rise significantly beyond the forecast if summer temperatures were warmer than expected … and electricity demand would be higher.”

“Both Fitzmartin and Wang are positive about the prospects for natural gas,” Wang said, adding that he expects prices to eventually fall as drillers gradually increase production capacity to meet demand.

“I think if we can overcome this summer in a relatively normal way, prices will have a chance to fall further after the winter of 2023,” Wang said.

Increased drilling is expected

Earlier this month, the Canadian Association of Energy Contractors, which represents contract drilling companies, revised its drilling forecast for 2022 from 6,457 units in November last year to 6,902.

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

Mark Scholz, president of the Canadian Association of Energy Contractors, says producers hiring drilling contractors do not seem as willing to spend as they did in 2008, when natural gas prices last rose. (CBC)

But Mark Scholz, president of the CAOEC, said producers hiring drilling contractors did not seem as willing to spend as they did in 2008, the last time natural gas prices rose.

Instead, they use high prices to repair their balance sheets, such as offering stock repurchases and dividends to reassure investors.

“Today is a much better industry (than in recent years), but I would not say we are growing at 110km / h,” Scholz said in an interview on Friday. “It is a gradual acceleration.”

However, even a gradual acceleration is welcome news in Western Canada, where most of the country’s natural gas production is located, which has suffered for years from falling commodity prices.

Scholz said there is more optimism for the industry to move forward, as Canada’s first LNG export facility (LNG Canada, currently under construction in Kitimat, BC) is expected to be online in 2026.

“These are really exciting times, and I think it shows how potential gas will be, both in terms of Canada’s energy transition and its ability to export internationally,” Scholz said.

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