The cheap seat is still Alberta
Do not write this as a crisis and do not write it as a boom. AECO is cheap. Producers hate it. Power and petrochemicals do not.
DOB Energy had AECO spot at C$1.46 per gigajoule on August 13. Station 2, the northern B.C. marker, was C$1.19. The September AECO future was C$1.37. TC Energy's early-August power note had September even softer, around C$1.25. Convert that into the language Houston uses and you are looking at a deep discount to a Henry Hub contract that is already under $3.
Alberta's official royalty reference price tells the same story over a longer tape. January was C$2.46 per GJ. By May it was C$1.16. June recovered to C$1.37. July and August are not posted yet. Last August was C$0.61, so this summer is better than last summer's collapse. It is still a number that does not pay for a lot of dry-gas drilling on its own.
Morningstar DBRS has AECO averaging about C$2.50 per Mcf for 2026, maybe C$3.00 in 2027 and 2028. That is their way of saying the basin stays in near-term oversupply even after LNG Canada started.
Why a working export plant did not clear the basin
LNG Canada Phase 1 is about 14 million tonnes a year, call it 1.8 Bcf per day at nameplate. East Daley had it near 1.6 Bcf per day by April, about 8.4 percent of Canada's marketable gas if you use a 19 Bcf per day production base. That is not a rounding error. It is also not a basin-clearing event.
Canada Energy Regulator figures cited by Morningstar show Western Canadian production growing about 0.74 Bcf per day a year since 2020, around 19.1 Bcf per day by mid-2025. Industry talk for 2026 is another 6 percent as producers lean into the LNG story. Associated gas from the Montney and the Duvernay keeps arriving because the liquids pay the bill. The gas is the leftover. Leftover gas does not wait for AECO to recover.
So you get the Canadian paradox in one sentence. Kitimat is working. AECO is still soft. Production is outrunning the new demand.
The old door is quieter too
Pipeline imports from Canada into the United States averaged 3.9 Bcf per day in the week ending August 19, down 8.4 percent week over week and 15 percent below the same week in 2025, according to Rystad data in the AGA weekly. Some of that is seasonal. Some of that is gas staying west because Kitimat wants it.
If those southbound flows keep sliding while Mexico takes more Permian gas for Energia Costa Azul and new power plants, the old north-south map is changing. Alberta used to clear into the Midwest. Now more of the basin is trying to clear into a Pacific dock. The dock is real. It is not 6 Bcf a day. Not yet.
What would actually lift AECO
Phase 2 at LNG Canada would double Kitimat. Woodfibre near Squamish is targeting 2027. Cedar, the Haisla-majority project next door in Kitimat, is aiming at late 2028 and just got B.C. approval to lift capacity to 3.75 million tonnes a year. East Daley has a world where the full B.C. slate exports up to 6.3 Bcf per day by the early 2030s. That would be about a third of 2025 production. That is a price story.
Until those cubic feet show up, the honest line is Morningstar's. Oversupply continues. AECO remains the cheap seat. LNG Canada changed the map. It did not change the price. Not yet.