LNG

The US Government forecasts a rise in natural gas prices as a result of both higher winter demand and rising LNG exports while the Freeport LNG plant was seen ramping-up in the coming months to reach full capacity by March 2023 after going on stream later.

US production of natural gas dropped in February while LNG exports also plunged 23 percent because of the bad weather and navigational restrictions on the Gulf Coast during the month.

July 8 (LNGJ) - The US Henry Hub natural gas spot price averaged $1.63 per million British thermal units in June, the lowest inflation-adjusted price going back to at least 1989, as a result of low demand, the Energy Information Administration said in its short-term outlook. However, the EIA expects falling production will put upward pressure on natural gas prices through the end of 2021. It forecasts that Henry Hub spot prices will average $1.93 per MMBtu in 2020 and $3.10 per MMBtu in 2021.

The United States expects daily natural gas requirements for LNG exports to increase by 36 percent during most of 2020 compared with 2019 and even higher by the end of 2020 as more liquefaction capacity comes on stream and existing plants ramp up production.

The US is increasing its domestic natural gas demand for gas-fired power plants as the number of facilities has now overtaken coal-fired plants and the power industry competes with liquefied natural gas export projects for abundant feed-gas resources.

US natural gas production in the Mid-Atlantic and Ohio region from the Marcellus and Utica shale basins is continuing to grow, resulting in adequate domestic supplies being available in the northern region and feed-gas been transported south for LNG plants on the Gulf Coast.

US liquefied natural gas exports rose in the past week even as feed-gas levels were lower and freezing weather in the Midwest and elsewhere increased domestic demand and led to a rise in pipeline imports from Canada.

LNG exports rose to seven shipments, six from Sabine Pass in Louisiana and one from Cove Point in Maryland, compared with six the previous week, while one vessel was lifting a cargo at Sabine Pass through January 31.

“Natural gas feedstock deliveries to US liquefaction facilities have decreased during the past two weeks and averaged 3.9 billion cubic feet per day compared with an average 4.9 Bcf/d from January 1 to January 15,” according to the weekly report from the Energy Information Administration.

“The Corpus Christi terminal has not had any feedstock deliveries since January 20, when the facility exported its first five commissioning cargoes,” noted the EIA.

Domestic natural gas demand surged, driven by the residential and commercial sectors amid the freezing weather.

“In the residential and commercial sectors, consumption increased by 11 percent, reaching a near-record high of 70.9 Bcf per day on January 30, the second-highest value ever recorded (the highest was 71.6 Bcf per day in January 2014),” stated the report.

The EIA said that supply remained flat. “The average total supply of natural gas remained the same as in the previous report week, averaging 94.0 Bcf per day,” said the report.

It noted that average net imports from Canada increased by 7 percent from the previous week because of the cold weather.

On the regional price front, there were rises in the Midwest and Chicago regions because of the historically cold weather.

Northeast prices were also higher, while the benchmark Henry Hub price declined 14 cents on the week to $2.96 per million British thermal units.

“A polar vortex blanketed the Midwest and Northeast at the end of the report week,” said the EIA.

“At the Chicago Citygate, the most heavily affected major trading hub, prices increased $1.88 per MMBtu from $3.11 per MMBtu to $4.99 per MMBtu with a weekly high of $7.46 per MMBtu on January 29,” added the report.

Prices rise sharply in Northeast cities during the polar vortex. At the Algonquin Citygate, which serves Boston, prices went up $5.57 from $3.53 per MMBtu to $9.10 per MMBtu after reaching a weekly high of $10.04 per MMBtu.

“At the Transcontinental Pipeline (Transco) Zone 6 trading point for New York City, prices increased $9.53 from $2.98 per MMBtu to their weekly high of $12.51 per MMBtu,” said the report.

Shale-gas prices in the Appalachian region also rose though at a slower pace. Tennessee Zone 4 Marcellus spot prices increased 16 cents on the week to $2.92 per MMBtu.

“Prices at Dominion South in southwest Pennsylvania rose 22 cents to $2.94 per MMBTU,” said the EIA.

In the storage report, net withdrawals from storage totaled 173 Bcf for the week ending January 25, compared with the five-year (2014-2018) average net withdrawals of 150 Bcf and last year's net withdrawals of 126 Bcf during the same week.

“Working gas stocks totaled 2,197 Bcf, which is 328 Bcf lower than the five-year average and 14 Bcf lower than last year at this time,” added the report.

Jan 11 (LNGJ) - US LNG exports were stable over the past week as 10 LNG vessels departed from the three liquefaction and export plants in operation, seven from Sabine Pass in Louisiana, two from Cove Point in Maryland and one from Corpus Christi in Texas. The 10 vessels had a combined LNG-carrying capacity of 36.2 billion cubic feet and one other carrier was lifting a cargo from Cheniere Energy’s Sabine Pass through January 10, according to the weekly natural gas report from Energy Information Administration. US LNG exports reached a new record high in December 2018 when 36 cargoes were exported, including the first from the Corpus Christi plant on December 11.

The United States has exported more natural gas than it imported for the second year in a row in the form of pipeline deliveries to Mexico and LNG shipments to scores of nations as more liquefaction capacity came on stream.

The US benchmark Henry Hub natural gas price, the main indicator of US LNG export values, averaged $4.15 per million British thermal units in November, up $0.87 per MMBtu from the October average and December future and spot prices have spiked to the highest since 2014.