June 25, 2018 – Natural Gas Intelligence
Leach XPress, Sabine Pass Outages Show Converging Domestic, Global NatGas Markets, Say RBN
By: Jeremiah Shelor
U.S. liquefied natural gas (LNG) exports have arrived, and recent North American market events show how the growing push-and-pull between domestic and global gas markets is here to stay, according to RBN Energy LLC analyst Sheetal Nasta.
With the start-up of five liquefaction trains -- four at Cheniere Energy Inc.’s Sabine Pass and one at Dominion Energy Inc.’s Cove Point -- the United States has gone from zero to an average 3.0 Bcf/d of LNG exports in just three years, a development that has already “reconfigured pipeline flows all the way from the Northeast and Midwest to the Gulf Coast, as Appalachian and other gas suppliers look for ways to get their gas south,” Nasta said.
As U.S. export capacity grows, and as the global market shifts more to “flexible and spot-oriented trade,” their will be “significant implications across the supply chain,” from producers all the way to destination markets, she said, pointing to the recent explosion on Columbia Gas Pipeline’s Leach XPress and an outage at Sabine Pass Train 3 as two examples of how domestic disruptions can have a ripple effect on global gas fundamentals.
Echoing forecasts offered up by IHS Markit, NextEra Energy Resources and the International Energy Agency, among others, Nasta calculated that based on current projects U.S. LNG export capacity by 2020 could reach 10 Bcf/d, or 76 million tonnes per year (mmty), growing to 11 Bcf/d (about 85 mmty) by 2023. This would put the U.S. share of global gas exports at around 20% over the course of about three years, she said.
“While some of this will be baseload volumes -- moving regardless of price -- some of it also will be variable, with the U.S. being the swing, or marginal, supplier,” Nasta said. “As that happens, global LNG movements will be increasingly susceptible to the inner workings and shifting dynamics of the U.S. gas market.
“...With just five of the 16-plus liquefaction trains currently online, more Northeast takeaway pipeline expansions on the way, and constraints developing on some existing pipelines, the market is headed for transformation and turmoil as it adapts to the new realities that come with rising export demand.” …
Read the full article here: http://www.naturalgasintel.com/articles/114834-leach-xpress-sabine-pass-outages-show-converging-domestic-global-natgas-markets-say-rbn
