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In addition to the protocol changes, TC Energy on Dec. 20 announced it had reached an agreement to reduce long-term tolls by 20 per cent on its pipeline network that moves Western Canadian gas to the Toronto and U.S. Midwest markets.

The improved access to storage and to major markets in Central Canada will expose domestic gas producers to North American benchmarks. The outcome is exactly what gas producers wanted, but the timing is unfortunate.

“Our objective, frankly, over the last few years has been to reconnect to the North American market,” Bregazzi said. “We’ve actually reconnected to a market that is now wrestling with its own demons.”

U.S. Energy Information Administration (EIA) data show that U.S. natural gas storage levels are up 19 per cent compared to last year. As of Dec. 20, U.S. natural gas producers had stashed away 3.25 trillion cubic feet (tcf) of natural gas for the winter heating season, compared with 2.73 tcf at the same time last year.

We’ve actually reconnected to a market that is now wrestling with its own demons Simon Bregazzi

Based on the rate of gas being withdrawn from storage, the EIA is forecasting that gas inventories will be 1.9 tcf at the end March, or eight per cent higher than the five-year average.

As a result, the Henry Hub benchmark natural gas price is expected to tumble to an average of US$2.55 per mcf in 2020, which is shy of the US$2.69 average in 2019 and a far cry from the US$3.27 average in 2018.

By contrast, natural gas storage levels in Alberta are 23 per cent below the five-year average, according to analysts at Tudor, Pickering, Holt & Co. who “expect them to remain at this level before they start to rebuild in the spring.”