U.S. LNG Feedgas Demand Could be Heading Higher This year

U.S. demand for LNG feedgas has picked up in recent weeks, posting a record high of 5.6 Bcf/d in late February and averaging more than 5 Bcf/d in March to date, as Cheniere Energy completed the fifth train at Sabine Pass and the first at Corpus Christi. That level is nearly 1 Bcf/d higher than last month and nearly double what it was at this time last year. But it’s just the start. Train 2 at Corpus Christi was approved for feedgas just yesterday and Kinder Morgan’s Elba Island project in Georgia just days before that. With about 30 MMtpa, or ~4.5 Bcf/d, of liquefaction and export capacity due online this year, feedgas deliveries are poised to surpass 9 Bcf/d by the end of the year, with nearly all of that incremental demand coming online along the Texas and Louisiana Gulf Coast. The pace of this demand growth over the course of the year will come down to how quickly the anticipated trains can complete construction and testing, the timing of which can depend on a whole host of factors, including the extent of the repairs or modifications that are needed along the way, the timing of regulatory approvals, or the timing of gas pipeline connections to supply the facilities. Today, we continue our series examining the status and timing of LNG export projects in 2019.

U.S. LNG was poised for a year of massive growth in 2024, with new terminals and expansions set to cause feedgas to rise and commercial success in the years following Russia’s 2022 invasion of Ukraine set to spur further LNG project development. Instead, construction delays have pushed projects back and feedgas in the past three months has averaged about 500 MMcf/d less than the same period last year. Meanwhile, the Biden administration’s pause on non-free trade (FTA) export licenses, lengthy delays to the Federal Energy Regulatory Commission (FERC) authorization process and the resulting legal challenges to both have brought project development to a near-standstill. In today’s RBN blog, we look at current U.S. LNG feedgas demand and how construction delays have shifted expectations for the next few years. 

The year-on-year gain in U.S. LNG feedgas demand has been the single biggest factor behind the soaring natural gas prices and storage shortfall this year. And there is more of that demand on the horizon. Cheniere Energy’s Sabine Pass Train 6 and Venture Global’s new Calcasieu Pass facility are due to start service in the first half of 2022. However, feedgas volume is likely to ramp up ahead of the new year as both projects progress through the commissioning phase and aim to export their first commissioning cargoes before the end of the year. How soon could that incremental feedgas demand show up? Getting a handle on the timing requires an understanding of how a liquefaction plant works and the various steps of the commissioning process. Today, we start a short series on what’s involved when bringing a liquefaction plant online and what that can tell us about the timing of incremental feedgas flows this fall/winter.