LNG

Freeport LNG, the US export facility on Quintana Island in Texas, is set for regular operations as port restrictions are lifted after Hurricane Beryl and as power supplies across the state are expected to be 80 percent restored by July 14.

The former BP Statistical Review of World Energy was handed over this week for its 72nd edition to the UK-based Energy Institute (EI), the chartered body for the energy industry and which will be the new custodian of the Review carrying the latest data from LNG to coal and renewables.

Kinder Morgan Inc (KMI), the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, reported third-quarter net income of $576 million, up from $495M in the prior-year quarter, as the executive team forecast a continuing and deepening LNG boom on the Gulf Coast.

The US Government expects higher-than-average Henry Hub natural gas prices as demand remained high and inventories low while shipments from the nation’s LNG export plants would increase by 17 percent in the fourth quarter of 2022 compared with the previous three months as Freeport LNG resumes operations in November and Cove Point LNG has a scheduled closure in October.

Ovintiv Inc., the shale oil and gas company with assets in key basins in North America, has signed an agreement to sell its Eagle Ford resources in south Texas to Validus Energy for $880 million to reduce debts as exploration and production companies in the LNG-exporting region of the US Gulf Coast have been badly hit by the combined oil price and Covid-19 slump since early 2020.

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.

The US Government expects LNG exports will average 8.5 billion cubic feet per day for all of 2021compared with 9.8 Bcf per day during January when around 18 to 22 cargoes were lifted each week from the six plants in operation amid high spot prices in North Asia.

Tellurian Inc., the developer of the Driftwood LNG plant in Louisiana, has made executive team changes after earlier imposing spending reductions to traverse the headwinds of the current financial environment.

US natural gas flows out of the Appalachian shale-gas basins into the rest of the country have continued to grow and averaged more than 16 billion cubic feet per day last month and proved useful in filling supply gaps as domestic use and LNG exports increase.

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.