Elba

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. 

Global natural gas prices went through the roof in December, and while prices are back down from those highs, they remain incredibly strong compared to years past and the economics for U.S. LNG exports are riding high. LNG exports have been in the money for quite some time, but feedgas deliveries to U.S. export terminals throughout the spring and summer of 2021 were somewhat lackluster as maintenance and operational issues at terminals and nearby pipelines kept feedgas from hitting its full potential. Gas deliveries to those terminals began climbing in the fall, first back to full utilization levels, and then beyond. Much of the record feedgas demand has been from commissioning activity at Sabine Pass Train 6, which produced its first LNG in December and is on track to begin full service early this year. But beyond that, operators have been pushing the existing fleet of terminals to operate at peak levels and produce additional cargoes, likely for sale in the spot market or on short-term contract, an extremely profitable endeavor given the prices in Europe, where most if not all destination-flexible cargoes have headed. In today’s RBN blog, we look at what’s driving LNG feedgas demand to its recent highs and how much higher it could go.

With U.S. natural gas production levels near all-time highs and storage injections running strong, LNG exports will be a critical balancing item for the domestic gas market this year. Yet feedgas demand in recent months has been anything but stable; rather, it’s proving to be susceptible to volatility, driven by a combination of offshore weather conditions, maintenance events, start-up activity and global market conditions, among other factors. At the same time, timelines for the remaining 20 MMtpa (2.6 Bcf/d) of new liquefaction capacity still due online this year are moving targets as coastal weather, construction-related delays and other variables affect target completion dates. Today, we discuss highlights from our new Drill Down Report on the impacts of recent and upcoming LNG export capacity additions.

Liquefaction capacity additions will add about 5 Bcf/d of natural gas demand in 2019, with almost all of that happening along the Texas and Louisiana Gulf Coast. The planned start-up of new liquefaction trains at the Sabine Pass, Corpus Christi, Cameron, Freeport and Elba Island projects means we can expect U.S. LNG export demand to double to nearly 9 Bcf/d by the end of the year. How fast will that new capacity and gas demand come on and how will the gas get to where it needs to be? Today, we take a closer look at the timing of the liquefaction capacity build-out and the related feedgas routes.

With Lower-48 natural gas production at record highs and averaging more than 5.0 Bcf/d higher than this time last year, LNG export demand will be all the more critical this winter and the rest of 2018 in order to balance the U.S. gas market. Deliveries to Cheniere Energy’s Sabine Pass LNG facility (SPL) are above 3.0 Bcf/d. Dominion Energy’s Cove Point LNG is due to add nearly 0.8 Bcf/d of export capacity and begin exporting commissioning cargoes any day now. Two other projects — Elba Island LNG and Freeport LNG — are due online before the end of 2018, while another high-capacity project, Cameron LNG, faces delays. These facilities will increase baseload demand for gas in the new year, but will it be enough, and how will it impact gas pipeline flows upstream? Today, we provide an update on the timing and potential impacts of new export LNG capacity over the next year.