Hurricane Laura

Last week, Hurricane Delta became the latest of a string of hurricanes and tropical storms that have assaulted the Gulf Coast this year and disrupted energy production in the Gulf of Mexico — and energy exports. A number of major storms made direct hits or glancing blows to crude export centers like Corpus Christi, Houston, Beaumont, and Louisiana, forcing marine terminals to either slow down their carrier-loading operations or shut down for a few days at a time. That led to a yo-yoing of weekly export volumes: way down one week, way up the next. Despite the short-term dislocations, however, total export volumes since the hurricane season started on June 1 are actually up slightly from the first five months of 2020, a testament to the resilience not only of the export market but to the marine terminals themselves. Today, we discuss how hurricanes and tropical storms have been affecting export-terminal activity.

Just as U.S. LNG exports were beginning to recover from months of market-driven cargo cancellations, major Hurricane Laura has cut the rebound short. With Laura taking aim at the Texas-Louisiana border — the location of two large-scale LNG export terminals, including the U.S.’s largest export facility, Cheniere Energy’s Sabine Pass Liquefaction terminal — total feedgas flows to U.S. terminals the past two days dived to fresh lows for 2020 and the lowest since February 2019. Gas production is also way down, with offshore Gulf of Mexico production shut-ins compounding the effects of already depressed drilling and completion activity this year. But production has the potential to rebound more quickly than LNG exports, which could exacerbate the onshore demand effects of the storm; It already will bring cooler weather and drench gas demand for power generation as it moves inland over the Southeast and into the Mid-Atlantic states. Today, we look at how LNG exports are being affected by the storm and what that could mean for the overall gas market balance in the coming days.