HomeNewsAlberta wildfires hit gas flow out of Canada to U.S., spiking prices

Alberta wildfires hit gas flow out of Canada to U.S., spiking prices

5/18/2023

(Reuters) - Abnormally hot and dry weather is set to return to Alberta on Thursday after a couple of cooler days helped calm wildfires that have slowed the flow of natural gas out of Canada into the United States and lifted gas prices.

Record-high temperatures and tinder-dry vegetation have led to an intense, early start to the wildfire season in western Canada this year and forecasters see no improvement in conditions at least until next week.

Alberta, which goes to the polls on May 29, has been the worst-hit province in western Canada, with about 92 active wildfires burning, including 26 out of control, leaving some 12,000 residents out of their homes as of Wednesday.

The amount of gas flowing from Canada to the United States dropped to a fresh 25-month low of 6.4 billion cubic feet per day (bcfd) on Wednesday, according to Refinitiv, as wildfires disrupted production.

U.S. natural gas futures gained about 2% on Thursday to a two-week high on the reduction in imports from Canada even as mild weather in the U.S. Lower 48 keeps demand for the fuel low for both heating and cooling.

U.S. gas futures have gained about 13% over the past two weeks since those Canadian exports started to decline.

The fires have also forced oil and gas firms to cut at least 319,000 barrels of oil equivalent per day (boepd) production, or 3.7% of the country's total output.

Consultancy firm Rystad Energy has estimated nearly 2.7 million barrels per day (bpd) of Alberta oil sands production in May is at risk in "very high" or "extreme" wildfire danger rating zones.

More than 2,500 firefighters, including personnel from Canadian and U.S. agencies, and the Canadian army, have been battling the wildfires. Smoke-filled air over western Canada cleared a bit on Thursday, according to Environment Canada's Air Quality Health index.

Wildfires have also proliferated in neighboring British Columbia, as well as in Saskatchewan and Manitoba provinces.

The blazes have put Alberta Premier Danielle Smith's disaster management skills - as well as her party's policies - under the microscope ahead of the election.

A cold front this week brought some reprieve, but accompanying strong winds carried wildfire smoke to neighboring provinces and created poor air quality in a large part of western Canada.

"Winds have weakened today across most of the province and temperatures are near normal for this time of year, but things will start to change tomorrow," Christie Tucker, an Alberta Wildfire official, said Wednesday afternoon.

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