Such Great Heights, Part 2 - U.S. LNG Outlook: Feedgas Demand Headed to 12 Bcf/d in Late 2021

After a roller coaster over the past year, U.S. LNG feedgas demand has been holding steady at record levels of around 11 Bcf/d for nearly a month now, with the exception of a few days due to pipeline maintenance. With Train 3 at Cheniere Energy’s Corpus Christi Liquefaction facility online and price spreads to global markets favorable for U.S. exports, that’s where it’s likely to stay, except for maintenance periods — at least until new liquefaction trains start commissioning later this year. Two Louisiana projects, Venture Global’s new Calcasieu Pass facility and the sixth train at Cheniere’s existing Sabine Pass terminal, have both indicated that they will begin exporting commissioning cargoes by year’s end — ahead of their originally proposed construction schedules — a prospect that could boost Gulf Coast feedgas demand to even greater heights by the fourth quarter of 2021. In today’s blog, we wrap up this short series with a detailed look at the two projects and implications for LNG feedgas demand this year.

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In Part 1, we began with an update of the most recent liquefaction capacity addition — Corpus Christi’s Train 3 on March 26 — and its impact on export capacity and feedgas demand, also putting it in the context of the short history of U.S. LNG and, particularly, the incredible volatility of the past year. This time last year, U.S. LNG export cargoes were being cancelled in droves because of poor economics for the first time ever. As cancellations mounted, a large chunk of U.S. LNG production was shut-in, reducing feedgas demand from what were record levels at the time of around 8.5-9 Bcf/d — about or just below levels consistent with full utilization of operating capacity — to less than 3.5 Bcf/d on average over the summer of 2020. While this was transpiring, however, construction on existing projects continued and 10.35 MMtpa (1.4 Bcf/d) of new export capacity was added, primarily along the Gulf Coast. The addition of Corpus Christi Train 3 last month brings the total U.S. LNG export capacity up to 75 MMtpa (9.9 Bcf/d), which equates to about 11 Bcf/d of feedgas demand across the six operational export terminals. We detailed these terminals and their respective capacities in Part 1; we’ve included the map again here in Figure 1 for reference.