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Trump tariffs may move gas prices, not flows

  • : Natural gas
  • 25/01/16

US president-elect Donald Trump's threat to impose 25pc tariffs on all imports from Canada would likely raise US natural gas prices if enacted, but not by enough to significantly alter flows across the border.

As anxiety over US-imposed tariffs mounted over the past week, gas prices for February delivery on the Pacific coast of southern Canada began trading at a steeper discount to their US counterparts. The February price at Westcoast station 2, a key indicator of western Canadian gas prices, on Wednesday was at a $4.38/mmBtu discount to northwest US gas hub Northwest Sumas, compared with a $3.43/mmBtu discount a week earlier. The February price at Canadian benchmark NIT/AECO on Wednesday also moved to a $2.56/mmBtu discount to the US benchmark Henry Hub in Louisiana from a $2.22/mmBtu discount a week earlier.

While other factors could be at play, the wider Canadian discounts line up with a shift in sentiment by Canadian oil and gas groups and politicians over the past week, as those groups coordinate to try and halt the threatened tariffs. "They're likely to come in on January 20th," Danielle Smith, premier of Alberta, a major oil and gas-producing Canadian province, said of the tariffs this week. The attitude is starkly different from a month earlier, when Michael Rose, chief executive of Tourmaline Oil, the largest Canadian gas producer, said at a Goldman Sachs energy conference that he thought there was a "low likelihood" that the tariffs would be imposed. "We'd agree with you," replied Goldman Sachs head of gas research Samantha Dart.

But while US-Canadian gas price spreads would widen if gas were not exempted from Trump's tariffs, the western US would probably not reduce purchases of Canadian gas, because "there's nowhere else for them to get the supply," FactSet senior energy analyst Connor McLean said. Moreover, even with a 25pc price increase, Canadian gas is still highly competitive against US-sourced gas and alternative power generation sources like coal. This is also the case for the US' upper midcontinent and east coast, though gas buyers in those regions could also source gas from Appalachia, Oklahoma or the Rockies if there were spare pipeline capacity.

The effect of tariffs on gas prices would also probably be dwarfed by more humdrum market dynamics, like the weather. Demand-boosting cold weather this month has quickly drawn down US gas inventories, which appear slated in the coming weeks to flip to a deficit to the five-year average for the first time in more than two years. Even colder weather early next week is also likely to trigger freeze-offs, which are production curtailments caused by extreme cold.

Given those more pressing concerns, "tariffs do not come up" in meetings with other market participants, Appalachian gas producer Seneca Resources marketing manager Rob Lindroos told Argus.

Approximately 99pc of US gas imports are from Canada via pipeline, with flows into the US averaging 8 Bcf/d (227mn m³/d) in 2023, according to the US Energy Information Administration. Those Canadian sales, accounting for nearly half of western Canada's production, provide crucial energy supplies to the US Pacific northwest and midcontinent, parts of which are far from US reservoirs.


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25/02/07

Tariffs have ‘pluses and minuses’: ConocoPhillips

Tariffs have ‘pluses and minuses’: ConocoPhillips

New York, 7 February (Argus) — Threatened US tariffs targeting Canadian imports have both "pluses and minuses" for US independent producer ConocoPhillips which has production on both sides of the northern border. The company's primary exposure to tariffs would center upon sales from its Surmont oil sands operations in Alberta, Canada, into the US. "We sell around half of our Surmont liquids into the US on a mix of pipeline and rail," said Andy O'Brien, ConocoPhillips senior vice president for strategy, commercial, sustainability and technology. "But the remainder is actually transported to the Canadian West coast or sold in the local Alberta market." If tariffs were to be implemented, it is "pretty difficult" to say exactly who would carry the burden -- producers or buyers -- he added. "The refiners in the Midwest and the Rockies have less options to substitute versus, say, the Gulf coast or the west coast refiners," O'Brien said. The company's diversified portfolio would also help shelter it from some exposure. "If we were to see tariffs, we'd likely see strengthening differentials for Bakken, for [Alaska North Slope crude] and possibly even the Permian," said O'Brien. "So lots of moving parts." Like others in the oil industry, ConocoPhillips is looking at the potential to supply power to cater to the boom in AI data centers. "It's got to be competitive for capital, but it certainly looks like some growth opportunities potentially coming, and we're assessing some of those opportunities right now," chief executive officer Ryan Lance told analysts after posting fourth quarter results. Although the Trump administration has called on domestic producers to step up output, Lance said his priority was to drive further efficiencies in operations. "A lot of our focus and attention right now is on permitting reform," Lance said, and the need to build out energy infrastructure. Drilling approvals, rights of ways, and permits on federal land all slowed under the administration of former-president Joe Biden and there is an opportunity now to get back on track. "That just adds to the overall efficiency of the system and should lead to a more sustained plateau or growth in our production coming out of the Lower 48 in terms of liquids and certainly the growing amount of gas volumes that are coming as well," Lance said. "So it just creates a better environment for investment and more efficient operations." Full-year 2025 output at ConocoPhillips is seen in the range of 2.34mn-2.38mn b/d of oil equivalent (boe/d), which includes 20,000 boe/d of planned turnarounds. Fourth quarter 2024 profit fell to $2.3bn from $3bn in the final three months of 2023, as higher volumes were more than offset by acquisition-related expenses and lower prices. Averaged realized prices fell 10pc to $52.37/boe from the fourth quarter of 2023. Fourth quarter output of 2.18mn boe/d represented an increase of 281,000 boe/d from the same quarter of the previous year. After adjusting for acquisitions and dispositions, output grew by 6pc. As part of a $2bn divestment goal, ConocoPhillips has signed agreements to sell non-core Lower 48 assets for $600mn. They are expected to close in the first half of the year. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: US to remain top crude producer


25/02/06
25/02/06

Crude Summit: US to remain top crude producer

Houston, 6 February (Argus) — The US is likely to remain the world's top crude producer for some time to come, according to shale executives at the Argus Global Crude Summit Americas in Houston, Texas, today. "In the foreseeable future, I don't really see a lot of change," said Shannon Flowers, director of crude and water marketing at Coterra Energy. There is still enough high-quality acreage to go after, while efficiency gains around faster drilling times and targeting longer wells are also helping to drive output gains. "There's a lot of creativity that goes on in trying to understand how we can do more with less," Flowers said today at the event. While the rig count is down 20pc over the last two years, production has grown by more than 1mn b/d. "Doing more with less is kind of a common theme," Flowers said in reference to operations at Coterra and across the industry. "I expect that to continue." While the Permian has dominated all the attention of late, the offshore Gulf of Mexico is likely to be an important driver of output going forward, with several projects starting up this year. Other regions such as the Rockies, Wyoming and possibly Utah could also see some growth. A recent round of mergers and acquisitions that saw $300bn of upstream oil and gas deals inked has further to run, says John Argo, vice president for the Williston Basin at Continental Resources. "There will continue to be more consolidation," Argo said. Scarcity with regard to remaining high-quality acreage means that valuations will continue to climb, he said. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Asset-backed oil trades on the rise


25/02/06
25/02/06

Crude Summit: Asset-backed oil trades on the rise

Houston, 6 February (Argus) — Asset-backed trading is becoming commonplace in the oil industry as companies up and down the supply chain bring capabilities in-house, delegates heard at the Argus Global Crude Summit Americas in Houston, Texas, today. "Traditionally, long term hedging was popular, and it still is, but in general we've seen a move towards the front end of the curve," said CME Group's managing director and global head of energy and environmental products Peter Keavey. "The risks are really in the prompt," said Keavy. "We're seeing a lot of hedging in the short term [and] that also is reflective of asset-based optimization." HC Group managing partner Paul Chapman has also noticed a continued shift in trading by banks, which either exited or scaled down operations in 2014 and 2015, to those directly in the industry. "I would argue that pretty much every single business around the world — producer, miner, refiner, retailer of fuels and major — is on some spectrum of developing some asset trading," said Chapman. "And it's driven by a need to capture more margin." Changing trade flows have naturally had a bearing on who becomes more involved in individual markets. "Over the past five years, European players have more and more exposure to US molecules, whether it be crude oil or natural gas," said Keavey, which has driven the growth of trade of WTI, RBOB, gasoline, and heating oil in international markets. Changing energy policy, and policies to reach other political objectives, have a tendency to shape energy flows, whether they are intended or not, the speakers said. The Russian-Ukraine conflict is a prime example, and there are clear signs that US president Donald Trump's second term in office will do the same. "As this world gets more shaped by trade wars and there's more and more government intervention, that itself starts to break down some of the fundamentals of how some of these markets work," said Chapman. Keavey expects Canadian crude to continue to flow even under a Canada-US trade war, but "the question is, what disruption happens to the pricing?" By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Amos to buy Sinopec Venezuelan oil, gas assets


25/02/06
25/02/06

Amos to buy Sinopec Venezuelan oil, gas assets

Caracas, 6 February (Argus) — US upstream start-up Amos Global Energy Management has agreed to buy some of Chinese Sinopec's oil and natural gas interests in Venezuela with an eye on US sanctions eventually easing there, the Houston-based firm said. Venezuela's state-owned PdV is the majority owner of the stake to be sold, which is part of the PetroParia joint venture with Sinopec in the Gulf of Paria. "Sinopec did not develop it better because of clashes with PdV management, but the potential to export gas to Trinidad and Tobago from the property is clear", Maracaibo-based analyst ChemStrategy said. Trinidad and Tobago has discussed developing gas fields that straddle its border with Venezuela to stem its downturn in production. But US sanctions on Venezuela's crude sector have slowed progress, and the administration of President Donald Trump has not indicated that it will change course . Amos "believes that this purchase will ultimately bring the investments needed to develop oil and gas production opportunities" there and in other nearby properties, including in a previous agreement in the same Gulf of Paria with Inepetrol. PdV officials and pro-Maduro lawmakers in Caracas said they were aware of the plan but declined to offer additional details. Amos has been seeking capital and arming agreements to be "prepared to increase Venezuelan production when existing sanctions are lifted." Amos is led by chief executive Ali Moshiri who retired as president of Chevron Africa and Latin America exploration and production in March 2017. Completion of the sale will require approval from the US Treasury's Office of Foreign Assets Control and the Venezuelan hydrocarbons ministry, Amos said. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's Beach cuts FY24-25 oil, gas output target


25/02/06
25/02/06

Australia's Beach cuts FY24-25 oil, gas output target

Sydney, 6 February (Argus) — Australian independent Beach Energy has narrowed its oil and gas output guidance for the year to 30 June 2025, given delays in bringing the Western Australian (WA) 250 TJ/d Waitsia gas plant on line. Beach will produce 18.5mn-20.5mn bl of oil equivalent/d (boe/d) in 2024-25, it said in its half-year results to 31 December. It revised the top end of its previous forecast of 17.5mn-21.5mn boe down because of delays at Waitsia, which is operated by joint venture partner Japanese trading house Mitsui. Beach has maintained its guidance for first sales gas at Waitsia in April-June. The Adelaide-based firm last month reported its output at 10.2mn boe in July-December 2024, 15pc higher on the year, leading Beach to raise the bottom end of its guidance. The five Waitsia LNG swap cargoes that Beach has executed to date have brought forward revenue for the firm, which reported A$139mn ($87.1mn) from the two shipped in July-December 2024. A fifth cargo was lifted from Australian independent Woodside Energy's 14.4mn t/yr North West Shelf (NWS) LNG terminal in January, while a possible sixth may occur before the end of June. "We have opportunities for additional swaps in the market and we're looking very closely… I'm hoping to get another [cargo] out before the half-year," chief executive Brett Woods said on 6 February. About 35pc of the gas exported via swap cargoes to date were from Beach's own 20 TJ/d (534,000 m³/d) Xyris gas plant, meaning it will not need to be swapped back, Woods said. Beach expects 8-10 cargoes/yr of Waitsia gas to be shipped until 2028, with scope to further extend the project's LNG exports following the WA government's changes to onshore gas export rules. Waitsia partners hold a gas processing agreement with the NWS JV running until the end of 2028. Beach will start its Offshore Gas Victoria programme in 2025 as part of its ambition to become a major domestic gas supplier. This includes drilling the Hercules gas prospect in Victoria state's offshore Otway basin in April-June, described as a "large scale opportunity" with prospective reserves of 100bn ft³ (280mn m³). No change was made to Beach's 2024-25 capital expenditure guidance of A$700mn-$800mn. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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