US forecasts surge in LNG exports through March 2022 as Henry Hub will average around $5.50 per MMBtu
The US government reported that the increase in the nation’s liquefied natural gas exports was supported by large prices differences between the benchmark Henry Hub and spot prices in Europe and Asia and forecast a surge in shipments through March 2022.
US well placed to export LNG and other fuels as per capital domestic use is lowest since 1967
The United States is well placed to export liquefied natural gas and other energy products to countries around the world from its growing surplus as Americans used an average of 61 million British thermal units (Btu) of energy per capita in the residential sector, a 2 percent fall from the previous year and the lowest since 1967.
US LNG exports rise even as feed-gas levels drop amid freezing weather and domestic surge
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 LNG and gas prices
Sept 21 (LNGJ) – US liquefied natural gas exports decreased by one shipment on the week to five cargoes, four from the Sabine Pass plant in Louisiana and one from Cove Point in Maryland. Three more carriers were lifting cargoes, two at Sabine and one at Cove Point. “Cove Point LNG facility received an LNG vessel on September 16, two days after the landfall of Hurricane Florence in North Carolina,” noted the weekly report from the Energy information Administration. US domestic natural gas prices rose with the benchmark Henry Hub spot price increasing 13 cents to $3.06 per million British thermal units, its highest since the end of January 2018 when prices averaged $3.21 per MMBtu. Other price increases were logged at the Chicago Citygate at $3.00 per MMBtu and at the Algonquin Citygate serving the Boston area where prices were 16 cents higher at $2.91 per MMBtu. Appalachian prices in shale-gas basins also rose, with the Tennessee Zone 4 Marcellus spot price up 36 cents to $2.55 per MMBtu.
US budget plans may have implications for LNG projects being developed in Gulf Coast states
The US fiscal 2018 budget proposes ending the sharing of federal revenue from new Gulf of Mexico oil and gas production with four Gulf Coast states where LNG projects are being developed.
LNG to dominate US natural gas exports after 2020 amid pipeline surge of shale gas to Canada
The US government says the nation’s increased natural gas trade will be dominated by LNG as early as 2020 as four more liquefaction facilities are scheduled to be completed, adding to current shipments from the Sabine Pass plant in Louisiana.
