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Feels Like the First Time - LNG Exports Impact U.S. Natural Gas Supply, Demand and Price, Part 2

After about four weeks offline for modifications and maintenance, Cheniere’s Sabine Pass liquefaction terminal in Cameron Parish, Louisiana began accepting nominal deliveries of feed gas starting last Friday, indicating the facility is due to ramp up to capacity any day now. Since the first export cargo in February, about 130 Bcf, or 0.6 Bcf/d, of natural gas has been delivered to the terminal. While those aren’t quite game-changing volumes yet, deliveries just prior to the outage were averaging more in the vicinity of 1.2 Bcf/d and indications are that deliveries could ramp up to more than 1.0 Bcf/d in short order with the restart and grow to more than 2.0 Bcf/d by the end of 2017. It’s clear that LNG exports are quickly becoming a prominent and inescapable feature of the U.S. natural gas market. Today, we wrap up our series on the growing impact of LNG exports on the U.S. supply/demand balance.

When we last wrote about Sabine Pass in Part 1 of this blog series, Cheniere had exported a total of 24 cargoes from Train 1, totaling about 80 Bcf of LNG, according to our friends at Genscape. Of those, seven cargoes were considered “commissioning cargoes” — test runs to get the facility up and running. Since then, Genscape’s North American LNG Supply & Demand real-time monitoring service has captured the loading and departure of another 10 cargoes from the terminal, two of them during the four-week long shutdown of the facility, including one that departed as recently as October 9th (2016), no doubt by tapping into the storage tanks. That now brings the total to 34 cargoes and 112 Bcf of exports from Sabine Pass. There is also about 17-Bcf/d of storage on site. Thus, pipe flows from Genscape’s Natural Gas Analyst query tool show a total of nearly 130 Bcf, or about 0.6 Bcf/d (red area in Figure 1) has been delivered to the Sabine Pass facility since that fated first cargo on February 24 (2016). That volume has now dwarfed the volume of pipeline receipts from all Lower 48 LNG import terminals, which have averaged 0.2 Bcf/d in the same period (blue area in Figure 1).

The first cargo from Train 1 departed February 24, 2016. By May, start-up activities for Train 1 were completed just as commissioning activities for Train 2 were beginning. And by August, Train 2 volumes were loaded onto its first export cargo and commissioning activities began for Train 3. Deliveries to the terminal cranked up to well over 1.0 Bcf/d for some days starting in August and in the first half of September. Just before the facility began ramping down for maintenance/modifications, it was soaking up an average 1.2 Bcf/d of supply from the market. Then came the shutdown — a planned outage to allow for modifications to the facility as well as routine maintenance. Pipeline flow data shows deliveries to the facility dropped from 1.16 Bcf/d on September 13 to less than 100 MMcf/d by September 18, and screeched to a complete halt by September 20.  (For more on Flow Data Analysis, see Sooner or Later.)

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