Gas prices across Greater Victoria have jumped following a pipeline explosion in B.C. that has affected refineries.
Drivers across the Greater Victoria area are feeling the pinch of high fuel costs after a natural gas pipeline exploded near Prince George on Tuesday.
The price of regular gasoline at many stations through the Capital Region was at 153.9 cents per litre on Thursday, the highest levels in the area since earlier in the summer. It was also an increase of nearly 15 cents per litre from the day before.
And Dan McTeague, senior petroleum analyst with GasBuddy, said prices could climb even more in the next few days as three out of four Washington State refineries have indicated they will have to reduce output until the pipeline is fixed.
“All refineries run on natural gas to create steam, to create energy, to turn oil into gasoline,” McTeague said.
“When they run into trouble, it’s clear that unless prices rise to attract vessels from other parts of the world, you’re going to end up with no supply or pretty dramatic increases in the price of gasoline.”
More than 1.6 billion cubic feet per day – roughly 10 per cent of Western Canada’s daily natural gas output – was stranded when Enbridge Inc. halted transport on the 36-inch line that exploded near Prince George, B.C and on its neighbouring 30-inch line.
The National Energy Board allowed Enbridge to restart the smaller line at a lower pressure, but analysts say that still leaves between 600 million and 800 million cubic feet per day of gas without an easy path to market.
“There are not a lot of other routes for gas to reach Vancouver or for export,” said Ian Archer, associate director for IHS Markit, pointing out about one billion cf/d of the normal daily payload is headed for export into Washington.
“It was the mainline that went out. So I would assume this is Enbridge’s absolute No. 1 priority to get fixed.”
Prices at the main interior B.C. trading hub have crashed to about $1 per thousand cubic feet from around $2.60 before the incident, said commodity analyst Martin King of GMP FirstEnergy.
“For those that can get gas out, prices at Station 2 have come down quite a bit because the line break is south of the trading point,” said King, adding producers who can’t get their gas out will have to shut down their wells.
Some B.C. gas is being redirected into Alberta markets, Archer said, causing prices there to slip from around $2.50 per gigajoule (an energy unit that’s similar in size to 1,000 cubic feet) to just over $2.
The analysts say they expect Enbridge will restore the pipeline to service within a week or two, given the lack of damage to the parallel line and the high priority of restoring gas to residential markets in B.C. at the beginning of winter.
Alberta and B.C. gas prices had jumped in recent weeks thanks to more demand because of unusually cold weather in Alberta.
With files from Dan Healing, The Canadian Press
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