LNG

US natural gas resources are so abundant even amid growing LNG exports and pipeline supplies to Mexico that the government says that the 
Lower 48 states will end the winter heating season with 12 percent more inventory than the previous five-year average.

Working natural gas in storage will end the 2019-2020 winter heating season from November 1 to March 31 at 1,935 billion cubic feet.

“This increase is the result of mild winter temperatures and continuing strong production,” said the Energy Information Administration in its latest short-term energy outlook.

The EIA then forecasts that net injections during the refill season from April 1 to October 31 will bring the total working gas in storage to 4,029 Bcf, which would be the largest monthly inventory level on record.

Year-over-year growth in dry natural gas production offset the growth in exports, especially of LNG, throughout 2019.

“On October 11, 2019, the total natural gas in storage surpassed the previous five-year average - an indicator of typical storage levels - for the first time since mid-2017,” added the report.

The report said it expected withdrawals from working natural gas storage to total 1,790 Bcf at the end of March 2020. 

“If realized, this would be the least natural gas withdrawn during a heating season since the winter of 2015-2016, when temperatures were also mild,” said the EIA.

Injections into and withdrawals from natural gas storage balance seasonal and other fluctuations in consumption. 

Natural gas demand is greatest in the winter months, when residential and commercial demand for natural gas for space heating increases. 

However, natural gas consumption in the power sector is greatest in summer months, when overall electricity demand is relatively high because of air conditioning.

The EIA expects the total working natural gas in storage will exceed the previous five-year average for the remainder of 2020, despite declines in dry natural gas production, increases in natural gas consumption in the electric power sector, and increases in natural gas exports. 

“Monthly natural gas production is expected to decline in 2020 from last year’s record levels as lower natural gas prices reduce incentives for natural gas-directed drilling and as lower crude oil prices reduce incentives for oil-directed drilling and associated gas production,” the report explained.

The latest US Government short-term energy outlook addressed issued such as high US natural gas inventories and out put as well as low prices and the impact on refined fuel from the forthcoming International Maritime Organization sulfur cap to reduce pollution in ports.

The US exported five LNG cargoes last week, a drop from seven shipments in the previous week, as domestic natural gas demand fell by 10 percent and inventories ended the winter heating season at their lowest level since 2014.

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.

US liquefied natural gas exports decreased in the past week to six shipments, four from Sabine Pass in Louisiana, one from Cove Point in Maryland and one from Corpus Christi in Texas, compared with eight the previous week, while two vessels were lifting cargoes at Sabine Pass through January 24.

LNG shipments fell as domestic natural gas demand increased over the holiday weekend and the start of the week, according to a report from the Energy Information Administration.

The average total supply of natural gas declined by 1 percent compared with the previous week and net imports from Canada dropped by 6 percent from last week as pipeline exports to Mexico rose by 1 percent.

“Total US consumption of natural gas rose by 4 percent compared with the previous week,” said the EIA.

“In the residential and commercial sectors, consumption increased by 8 percent as cold temperatures spurred heating demand,” it added.

“Natural gas consumed for power generation was flat, averaging 25.3 billion cubic feet per day,” stated the report.

Spot prices fell at most locations with the Henry Hub dropping from $3.61 per million British thermal units to $3.10 per MMBtu.

“Net withdrawals from working gas totaled 163 Bcf for the week. Working natural gas stocks are 2,370 Bcf, which is 1 percent more than the year-ago level and 11 percent lower than the five-year (2014-2018) average for this week,” said the EIA.

“Prices at the Algonquin Citygate, which serves Boston-area consumers, were volatile amid stretches of cold temperatures. Prices went down $7.85 from $11.38 per MMBtu on January 16 to $3.53/MMBtu,” added the report.

“At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased $1.06 from $4.04 per MMBtu to $2.98 per MMBtu,” it said.

The EIA said that shale-gas prices in Appalachia fell as temperatures increased and takeaway capacity was restricted.

The Tennessee Zone 4 Marcellus spot prices decreased 67 cents from $3.43 per MMBtu on January 16 to $2.76 per MMBtu.

“Prices at Dominion South in southwest Pennsylvania fell 70 cents from $3.42 per MMBtu to $2.72 per MMBtu,” said the report.

“A combination of factors likely affected prices in the region. As in New England and New York City, cold temperatures throughout the Northeast over the long weekend receded, reducing heating demand,” it added.

“Prices west of the Rockies also decreased as a winter storm that brought snow to the mountains of Southern California moved out of the area,” according to the EIA.

Prices at the Pacific Gas & Electric Citygate in Northern California fell $1.02 per MMBtu to $3.60 per MMBtu.

Southwest and Texas prices were also lower. At the Waha Hub in West Texas, which is located near Permian Basin production activities, prices averaged $2.29 per MMBtu, $1.32 per MMBtu lower than Henry Hub prices.

US LNG exports were slightly lower in the past week as natural gas day-ahead and futures prices jumped after colder weather swept across the nation and domestic demand rose along with production.

Eight LNG vessels departed from the export plants, six from Sabine Pass in Louisiana, one from Cove Point in Maryland and one from Corpus Christi in Texas, compared with 10 carriers the previous week, while two other vessels were lifting cargoes through January 17.

“Henry Hub spot prices rose from $2.91 per million British thermal units on January 9 to $3.61 per MMBtu,” said the Energy Information Administration in its weekly report.

The EIA said it estimated that the Sabine Pass LNG facility has been running above 100 percent of its nominal baseload liquefaction capacity in the winter months.

“Annual 2018 utilization at Sabine Pass is estimated at 106 percent of the baseload and 91 percent of peak capacity,” said the report.

“The Cove Point terminal has also run above 90 percent of its baseload capacity in November-December 2018, with an overall utilization of 67 percent of baseload and 62 percent of peak capacity since the facility started operation in March 2018,” added the EIA.

US domestic natural gas spot prices rose at most locations and net withdrawals from working gas in the previous week totaled 81 billion cubic feet.

“Working natural gas stocks are 2,533 Bcf, which is 3 percent lower than the year-ago level and 11 percent lower than the five-year (2014-2018) average for the week,” said the report.

“Below-freezing temperatures across most of the Northeast led to higher prices,” it added.

Prices at the Algonquin Citygate serving Boston rose by $4.78 per MMBtu from $6.60 per MMBtu to a high of $11.38 per MMBtu.

“Prices at the Transcontinental Pipeline Zone 6 trading point in New York City rose by $2.13 from $3.12 per MMBtu to $5.25 per MMBtu,” said the EIA.

Tennessee Zone 4 Marcellus shale-gas spot prices increased from $2.71 per MMBtu to $3.43 per MMBtu.

Prices at the Pacific Gas & Electric Citygate in Northern California rose $1.20 from $3.42 per MMBtu to $4.62 per MMBtu.

The average total supply of natural gas increased in the week by 1 percent to 94.4 billion cubic feet per day and total US consumption of natural gas rose by 18 percent, averaging 97.2 Bcf/d.

“Natural gas consumed for power generation rose 14 percent. Industrial sector consumption increased 5 percent week over week and in the residential and commercial sectors, consumption increased 30 percent, averaging 46.9 Bcf/d, as winter weather swept through most of the Lower 48 states,” said the report.

Pipeline natural gas exports to Mexico declined by 1 percent, averaging 4.7 Bcf/d.

The US began exporting LNG from the Lower 48 states in February 2016, when the Sabine Pass liquefaction terminal in Louisiana shipped its first cargo.

Since then, Sabine Pass expanded from one to five operating liquefaction Trains, the Cove Point LNG export facility began operations in Maryland and the Corpus Christi Train 1 shipped its first cargo in December 2018.

The EIA estimates that once the remaining three facilities under construction, Elba Island in Georgia, Cameron in Louisiana, and Freeport in Texas come on stream, along with the remaining two Trains at Corpus Christi, US nominal baseload liquefaction capacity will stand at 9.6 Bcf/d, or 72.3 million tonnes per annum, and peak capacity at 10.7 Bcf/d (80.9 MTPA).

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.

Dec 21 (LNGJ) - US LNG exports amounted to seven shipments in the past week, six from the Sabine Pass plant in Louisiana and one from Cove Point in Maryland, while one vessel was lifting a cargo at Sabine Pass through December 19, according to the weekly report from the Energy Information Administration. US spot natural gas prices fell at most locations, with the benchmark Henry Hub dropping from $4.20 per million British thermal units over the week to $3.56 per MMBtu as storage concerns receded and the weather turned warmer.
   “Prices have declined as temperatures were warmer than normal across the Lower 48 states and much warmer than normal across the Great Plains,” said the EIA. At the Chicago Citygate prices decreased 68 cents to $3.31 per MMBtu. At the Algonquin Citygate serving the Boston area prices dropped by $3.30 per MMBtu from $7.15 per MMBtu on December 12 to $3.85 per MMBtu. Tennessee Zone 4 Marcellus spot prices for shale gas dropped 71 cents to $3.28 per MMBtu. Prices at Dominion South in southwest Pennsylvania fell 75 cents to $3.22 per MMBtu.

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.

US LNG cargoes were being shipped to the UK to take advantage of higher seasonal prices as US natural gas futures and spot prices also stayed high as weather reports were for colder medium-range temperatures.