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.
Before we get to today’s topic, we’d be remiss if we didn’t touch on the devastating impact of what is now Tropical Depression Ida. Ida made landfall as a Category 4 hurricane just before noon on Sunday near Port Fourchon along the eastern Louisiana coastline and remained a hurricane as it moved north toward Mississippi, bringing with it 6- to 12-foot storm surges, 150-mph winds and flash flooding. Entergy reported extensive damage with more than 2,000 miles of transmission lines out of service and nearly 1 million customers without power early Monday, primarily in eastern Louisiana, saying it could be weeks before power will be restored in the hardest hit areas. As for Louisiana’s Gulf Coast LNG operations, Ida’s easterly track largely spared the LNG export facilities from damage or shutdowns, and terminal operations appear to have remained relatively stable with only a temporary disruption to port and marine activity over the weekend. Lower 48 LNG feedgas deliveries as of Monday were at 9.6 Bcf/d, down about 600 MMcf/d from recent days, with all that attributable to a drop in flows to Sabine Pass. However, that may be more due to maintenance on Transco Pipeline than to storm impacts.
Turning back to the topic of today’s blog — the commissioning stages and timing of new feedgas demand this fall — when we last discussed the process of starting up new liquefaction trains back in 2019, LNG feedgas deliveries were just topping 5 Bcf/d, but there was no less than 30 million metric tons per annum (MMtpa), equivalent to ~4 Bcf/d of liquefaction capacity, that was scheduled to come online over the course of that year. There’s nowhere near that amount of liquefaction due online in the next few months or even in the next couple of years. Nevertheless, feedgas requirements of LNG export facilities have been just as big a driver of the Lower 48 gas market this year as they were back then and will continue to be closely watched heading into this winter.
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