July 6, 2023

Station 2 Basis Differentials Relative to AECO-NIT

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Station 2 Basis Drivers

Recent NGTL connection to Aitken Creek Storage and enhanced USJR capacity should provide increased Station 2 connectivity to AECO-NIT summer season pricing, when AECO-NIT-Station 2 basis tends to widen. Less seasonal volatility – narrows basis.

LNG Canada start-up in 2025 brings new LNG exports off Canada’s west coast. Enbridge 300 MMcf/d T-South expansion expected in 2027 to feed Woodfibre LNG  – narrows basis.

Increasing Carbon tax throughout the forecast – widens basis.

Station 2 Price Forecast to 2035

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In general, all North American natural gas prices were impacted directionally the same over the past couple of years; downward due to the covid pandemic in 2020, increasing in 2021 as markets recovered and jumping considerably higher in 2022 following the Russian invasion of the Ukraine. However, not all price points were impacted to the same degree.

The 2020 Station 2 price of $1.65 USD/MMBtu is down almost 135% compared to $3.90 in 2010. Like all North American prices, Station 2 increased the 2 years following 2020; up 60% to $2.60 in 2021 and up a further 35% to $3.50 in 2022. Incorrys expects Station 2 prices to fall from $3.50 in 2022 to $1.60 in 2023 as increased supply balances the market. Prices generally continue to increase over the forecast period reaching $3.60 by 2035.

Station 2, located in northeastern BC, is the gathering point for much of the gas from northern BC gas wells and processing plants; gas can either flow south down the mainline into the Pacific NW, or eastward into Alberta and into the Alliance pipeline.