Canadian natural gas companies shut in production due to weak pricing (updated)

Kelt Exploration

12/09/2022 21:04

(Adds Kelt Exploration production shut-in)
    By Nia Williams
    Sept 12 (Reuters) - Two Canadian natural gas producers on
Monday 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  TOU.TO , Canada's largest gas producer, cut
its third-quarter output by 1.5%, or 7,500 barrels of oil
equivalent per day (boepd), although its full-year production
guidance remains unchanged at 507,000 boepd.
    Kelt Exploration Ltd  KEL.TO  reduced its full-year 2022
production forecast by 1,500 boepd to around 29,000 boepd.
    Spot natural gas prices at the AECO hub in western Canada
tumbled last month and briefly turned negative as maintenance on
TC Energy's  TRP.TO  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  NG-ASH-ALB-SNL  traded at $2.248 per
million British thermal units (mmBtu) at AECO on Friday, 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-based Tourmaline shut in approximately 100 million
cubic feet a day 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 C$79.99, while Kelt shares were down 0.8% at C$6.33.

 (Reporting by Nia Williams; Editing by Lisa Shumaker)
 ((nia.williams@thomsonreuters.com; +1 403 531 1624; Reuters
Messaging: nia.williams.thomsonreuters.com@reuters.net))