LNG

The US government expects natural gas prices in the US and Europe to remain volatile through to 2022 with the Henry Hub averaging $5.80 per million British thermal units in the fourth quarter of 2021 as US LNG exports are set to increase through 2022 to meet soaring global demand even as they declined 4 percent last month.

The latest Henry Hub forecast is $1.80 per MMBtu higher than in the previous short-term energy outlook issued by the US Energy Information Administration.

“We estimate that US LNG exports averaged 9.3 billion cubic feet per day in September, down 4 percent from August,” said the EIA.

Despite the recent monthly decline, the agency noted that these were the most US LNG exports for September since the US began exporting cargoes from the Lower 48 states in February 2016.

“Even though September exports were a record for the month, they were limited by weather conditions, which led to the suspension of piloting services for several days at Sabine Pass, Cameron, and Corpus Christi,” noted the EIA.

“We expect that LNG exports will average 9.1 billion cubic feet per day in October and then increase in the coming months,” said the report.

The Cove Point LNG terminal in Maryland is scheduled to complete its annual maintenance by mid-October and resume exports this month.

Through this winter, the report said LNG exports would average 10.7 Bcf per day as global natural gas demand remains high.

Several new LNG export Trains, the sixth Train at Sabine Pass LNG and the first Trains at the new Venture Global LNG export facility at Calcasieu Pass LNG, then enter service in 2022.

The EIA outlook also forecast that US inventory draws from working gas storage would be slightly more than the five-year average this winter.

“We expect that factor, along with rising US natural gas exports and relatively flat production through January will keep US natural gas prices near recent levels before downward pressures emerge,” stated the report.

“Given low natural gas inventories in both US and European natural gas storage facilities and uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months,” added the agency.

The EIA estimates that US natural gas inventories ended September 2021 at about 3.3 trillion cubic feet, 5 percent less than the five-year (2016-2020) average for this time of year.

Injections into storage this summer have been below the previous five-year average, largely as a result of more electricity consumption in June due to hot weather, and increased exports even as domestic natural gas production has remained flat.

Woodside Petroleum, the operator of two LNG export plants in Western Australia, posted a 12 percent first-quarter increase in oil and gas production, though prices were down 20 percent along with revenues from the same three months a year ago.

Woodside, one of the biggest regional suppliers of LNG cargoes to North Asia, reported sales revenue of US$1.08 billion for the quarter ended March 31, down from US$1.36Bln a year earlier.

Production came to 24.2 million barrels of oil equivalent, up from 2.17M boe as the company mitigated the impacts of Tropical Cyclone Damien during the quarter.

Total LNG output for Woodside rose 4.5 percent to 18.31M boe from 17.53 boe in the prior-year quarter.

At the same time, Woodside like all other companies in the industry implemented responses to the combined effects of the Covid-19 outbreak and lower commodity prices.

Woodside’s first-quarter one-sixth share of LNG sales at the North West Shelf plant in Western Australia came to 606,577 tonnes, down from 652,246 tonnes in the same quarter of 2019.

The Perth-based company’s sales from its stake in the Chevron-operated the Wheatstone plant in the Pilbara region of Western Australia rose to 236,185 tonnes from 175,932 tonnes in the 2019 quarter.

At Woodside’s single-Train Pluto LNG plant sales amounted to 1.163 million tonnes in the quarter, up on last year’s 1.107MT.

“Tropical Cyclone Damien, which crossed the Western Australian coast in February, was the most significant weather event ever to pass over Woodside’s production facilities on the Burrup Peninsula,” stated Woodside Chief Executive Peter Coleman in the company's first-quarter report.

“Despite the severity of the storm, the team put in an outstanding effort to ensure the safety of our people and our assets and restore normal operations in a matter of days,” added the CEO.

“Nevertheless, revenue for the quarter was impacted by reduced trading activity and lower realised prices due to Covid-19 and an unprecedented combination of oversupply and short-term demand destruction,” stated Coleman.

“Of course, most of the quarter was overshadowed by the growing threat of the Covid-19 pandemic, which has required us to take swift and decisive action to protect our workforce, communities and operations,” he said.

Coleman noted that the company had already made “tough but prudent decisions” to ensure the financial integrity of the business with spending cuts in 2020 of 50 percent.

“A targeted final investment decision on our Scarborough and Pluto Train 2 developments has been deferred from this year to next,” said Coleman.

“We made solid progress on our near-term growth projects during the quarter, taking FID on Sangomar Field Development Phase 1 in Senegal and the North West Shelf’s Greater Western Flank Phase 3, as well as making significant execution progress on Pyxis Hub and Julimar-Brunello Phase 2,” he added.