AECO gas prices may strengthen to around 75 Canadian cents per million British thermal units less than prices at the U.S. Henry Hub
Roughly 1.9 billion cubic feet of daily gas production that will be required for LNG Canada is being sold into the North American market currently, depressing prices, he said. That gas will begin going into LNG Canada once it starts operation, which is scheduled around the middle of next year, Rose said.
“That sink should create strong pricing for AECO and BC Station 2” prices, he said. “You’ll pull it out of a market that’s largely imbalanced most days.”
Rose, who spoke at the opening of a compressed natural gas fueling station, has led Tourmaline during a period of rapid growth, mostly through acquisitions of other western Canadian gas drillers, including Bonavista Energy Corp. last year and Crew Energy Inc.
Tourmaline’s lower cost structure allows it to generate more cash flow from the assets than their previous owners, and the company will continue to execute on deals that “make sense,” Rose said.
“We’re patient,” he said. “We don’t have to buy anything. We have a huge drilling inventory.”
Tourmaline last year started sending natural gas from British Columbia to Cheniere Energy Inc.’s LNG export terminal on the U.S. Gulf Coast, and Trafigura Group also has 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 also are pushing forward with a gas-export project of their own off the British Columbia coast, called Ksi Lisims LNG.