Today’s blog on widening AECO differentials is a followup to last night’s blog “NGTL’s USJR Outages to Impact Q2/Q3 Production, Lack of New Q4 Capacity Expected To Push Back H1 IPOs” {LINK]. NGTL outages impact AECO differentials and we expect to see AECO differentials hurt (widen) this summer with the NGTL outages highlighted in our blog last night. But we remind that the recent widening AECO differential is also impacted by other factors ie. REX Zone 3 expansion.
AECO differentials have widened in the past few months. There are a multitude of factors that impact AECO prices relative to HH. But we believe two of the key factors were the NGTL outages in Nov/Dec 2016, and the startup of REX Zone 3 expansion in early Jan. The below graph shows the HH less AECO differentials in US$ since Oct 1, and it shows how HH has dramatically outperformed ie. the differential widened.
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