Tourmaline Sees LNG Canada Cutting Alberta Gas Discount in Half
AECO Gas Prices May Strengthen to Around 75 Canadian Cents Per Million British Thermal Units Less than Prices at the U.S. Henry Hub
In a recent interview, Michael Rose, the chief executive of Tourmaline Oil Corp., expressed his optimism about the future of natural gas prices in Alberta. According to Rose, the discount on Albertanatural gasmay shrink by half once the Shell Plc-ledLNG Canadaproject begins exports next year.
The Impact of LNG Canada on AECO Gas Prices
Rose stated that roughly 1.9 billion cubic feet of daily gas production will be required for LNG Canada, which is currently being sold into the North American market, depressing prices. However, once LNG Canada starts operation, this gas will begin going into the project, creating a stronger pricing environment for AECO and BC Station 2 prices.
"This sink should create strong pricing for AECO and BC Station 2," Rose said. "You’ll pull it out of a market that’s largely imbalanced most days."
Rose’s comments suggest that the start-up of LNG Canada will have a positive impact on gas prices in Alberta, potentially reducing the discount to around 75 Canadian cents per million British thermal units less than prices at the U.S. Henry Hub.
Tourmaline’s Growth Strategy
Under Rose’s leadership, Tourmaline has experienced rapid growth, mostly through acquisitions of other western Canadian gas drillers, including Bonavista Energy Corp. last year and Crew Energy Inc.
Rose attributed this growth to Tourmaline’s lower cost structure, which allows the company to generate more cash flow from its assets than their previous owners. He emphasized that the company will continue to execute on deals that "make sense," while remaining patient and not feeling pressured to make acquisitions.
"We’re patient," Rose said. "We don’t have to buy anything. We have a huge drilling inventory."
The Demand for Gas in North America
Rose highlighted the strong demand for gas in North America, driven by growing LNG exports and increasing demand for power from artificial intelligencedata centres.
Data centres could generate an additional five billion cubic feet a day of gas demand in North America, Rose said, although projections range from three billion to 30 billion cubic feet a day.
Tourmaline’s Commitment to Gas Exports
Last year, Tourmaline started sending natural gas from British Columbia to Cheniere Energy Inc.’s LNG export terminal on the U.S. Gulf Coast. Trafigura Group has also signed long-term deals to buy natural gas and liquefied natural gas from Tourmaline, with exports starting in 2027.
Tourmaline and other large Canadian producers are also pushing forward with a gas-export project of their own off the British Columbia coast, called Ksi Lisims LNG.
Conclusion
The start-up of LNG Canada is expected to have a significant impact on AECO gas prices, potentially reducing the discount by half. Tourmaline’s growth strategy and commitment to gas exports suggest that the company will continue to be a major player in the Canadian natural gas market.
As the demand for gas in North America continues to grow, companies like Tourmaline are well-positioned to take advantage of this trend. With its strong leadership and strategic vision, Tourmaline is likely to remain a key player in the industry for years to come.
Recommended Reading
- Tourmaline Oil Continues Acquisition Push
- LNG-Export Project in B.C. Attracts Interest
Share Your Thoughts
What are your thoughts on the impact of LNG Canada on AECO gas prices? How do you see Tourmaline’s growth strategy and commitment to gas exports shaping the future of the Canadian natural gas market?
