Posts from Sheetal Nasta

Monday, 05/06/2019

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.

Tuesday, 04/30/2019

The cascade of LNG export project news continues. In the past week, yet another “second-wave” U.S. LNG export project — NextDecade’s Rio Grande LNG — cleared FERC’s environmental review process. That follows news of three other projects that received their environmental approvals this month; plus two other projects — Tellurian’s Driftwood LNG and Sempra’s Port Arthur LNG — got final FERC authorization to construct their facilities, should they make the financial commitment to proceed; and, finally, plans for a brand new export terminal, Venture Global’s Delta LNG, were unveiled. All in all, there are more than 20 announced projects totaling 235 MMtpa (~35 Bcf/d) that are looking to catch the second wave of U.S. LNG exports in the next decade. The timing of their regulatory approvals and final investment decisions will determine, in part, when this next wave — or shall we say tsunami — of export demand will materialize. Today, we wrap up our second-wave LNG project update series with a look at the progress made by some of the remaining projects that we’re tracking.

Tuesday, 04/23/2019

2019 is slated to be a watershed year for U.S. LNG export projects vying to catch the second wave — the first wave being the slew of liquefaction trains already operational or in the process of being commissioned or constructed. As expected, regulatory and commercial activity has heated up around the two dozen or so longer-term proposals to add liquefaction capacity along the U.S. coastlines over the next decade. Last week, the Federal Energy Regulatory Commission (FERC) approved two of those projects — Tellurian’s Driftwood LNG and Sempra’s Port Arthur LNG — and several others, including Driftwood and NextDecade’s Rio Grande LNG, also have made progress on the commercial front. Many of these projects are targeting a final investment decision (FID) this year. Today, we continue a series highlighting the second-wave projects’ latest developments.

Tuesday, 04/09/2019

The winter 2018-19 natural gas market was one of the most chaotic in recent memory, with the NYMEX Henry Hub futures contract last fall rocketing up to nearly $5/MMBtu in a matter of weeks, only to collapse in late 2018/early 2019 to an average $2.60 in January. The physical gas market also swung to extremes in recent months, setting both the highest ($200/MMBtu at the Sumas, WA, hub) and lowest (negative $9.00/MMBtu at the Waha hub) trades ever recorded in the U.S. These anomalies occurred amid steep supply growth from the Marcellus/Utica and Permian producing regions and rapidly advancing demand, particularly from burgeoning LNG exports along the Gulf Coast, while infrastructure scrambled to keep pace to bridge the two. And there’s more of that volatility ahead. Close to 5 Bcf/d more LNG export capacity is being added this year alone, and Lower-48 gas production is poised to continue growing. Today, we lay out our view of the recent volatility and the biggest factors shaping the gas market over the next five years, based on Rusty Braziel’s Backstage Pass Fundamental Webcast last week.

Thursday, 03/28/2019

Midstreamers have been struggling to keep processing and natural gas pipeline constraints at bay in Oklahoma’s SCOOP/STACK plays, and the situation hasn’t gotten any easier in the past 18 months or so. Associated gas production from the Cana-Woodford has surpassed expectations, climbing 1 Bcf/d in that time to new highs near ~4.5 Bcf/d. Efforts by pipeline operators to keep pace with production gains have largely been on a piecemeal basis, mostly to tie in processing plants or modify/expand existing systems. Cheniere Energy’s Midship Project is looking to change that. The greenfield project, which received its final notice to proceed with construction from the Federal Energy Regulatory Commission (FERC) late last month, will level-shift takeaway capacity out of Oklahoma up by 1.44 Bcf/d in one fell swoop by the end of 2019. Today’s blog provides an update on Midship and other expansions in the region.

Wednesday, 03/20/2019

After a period of delays, commissioning activity at the newest U.S. LNG export terminals is poised to accelerate in the coming months, in turn bringing on incremental feedgas demand. Sempra’s Cameron LNG has said it’s ready to introduce feedgas to its fuel system and is awaiting federal approval. Meanwhile, liquefaction projects at Kinder Morgan’s Elba Island LNG and Freeport LNG terminals are gearing up to take feedgas in the next month or so. Feedgas deliveries to the operating export facilities in the past seven days have averaged 5.5 Bcf/d. These three projects alone are slated to add another 1.2 Bcf/d of incremental feedgas demand by July, bringing the total to 6.7 Bcf/d by then, if all goes well. In today’s blog, we continue examining the status and timing of LNG export projects in 2019, this time with a closer look at the Cameron, Elba and Freeport projects.

Tuesday, 03/12/2019

U.S. demand for LNG feedgas has picked up in recent weeks, posting a record high of 5.6 Bcf/d in late February and averaging more than 5 Bcf/d in March to date, as Cheniere Energy completed the fifth train at Sabine Pass and the first at Corpus Christi. That level is nearly 1 Bcf/d higher than last month and nearly double what it was at this time last year. But it’s just the start. Train 2 at Corpus Christi was approved for feedgas just yesterday and Kinder Morgan’s Elba Island project in Georgia just days before that. With about 30 MMtpa, or ~4.5 Bcf/d, of liquefaction and export capacity due online this year, feedgas deliveries are poised to surpass 9 Bcf/d by the end of the year, with nearly all of that incremental demand coming online along the Texas and Louisiana Gulf Coast. The pace of this demand growth over the course of the year will come down to how quickly the anticipated trains can complete construction and testing, the timing of which can depend on a whole host of factors, including the extent of the repairs or modifications that are needed along the way, the timing of regulatory approvals, or the timing of gas pipeline connections to supply the facilities. Today, we continue our series examining the status and timing of LNG export projects in 2019.

Monday, 03/04/2019

Natural gas spot prices at Sumas, WA, on Friday went as high as $200/MMBtu, a record price not only for the Pacific Northwest spot gas market, but for the U.S. That level surpassed even the highest price seen in the premium Northeast market in the pre-Shale Era. Other Western prices also rose Friday but not to anywhere near Sumas, with intraday highs at the other hubs mostly staying below $10/MMBtu. This is just the latest instance of turmoil in the Pacific Northwest gas market since last fall, when a rupture on Enbridge’s Westcoast Energy/BC Pipeline system (on October 9) disrupted Canadian gas exports to Washington State at the Sumas border crossing point. Ongoing testing on the Westcoast system and the resulting capacity reductions for deliveries to Sumas, along with reduced deliverability at the region’s largest storage facility, Jackson Prairie, over the past month have made the Pacific Northwest more of a demand “island” than ever, especially as those issues coincide with this week’s polar-vortex weather. Sumas prices for today’s flows re-entered the stratosphere, averaging just under $16/MMBtu, but remained the highest price in the country. Today, we review the market conditions contributing to the sky-high prices.

Tuesday, 02/26/2019

With about 30 million metric tons per annum (MMtpa) of liquefaction capacity scheduled to come online in 2019, feedgas deliveries are poised to be the biggest driver of Lower-48 natural gas demand this year. The timing of this emerging export demand growth from these complex, multi-process facilities will come down to a veritable obstacle course of construction and testing timelines and regulatory approvals. Understanding these factors will be key to anticipating the gas-market impacts of the oncoming demand. Today, we begin a short series breaking down the liquefaction train commissioning process and what it tells us about the timing of incremental feedgas demand over the next several months.

Thursday, 02/14/2019

The U.S. natural gas market last week was again reminded of the hair-trigger conditions that Permian producers and marketers are operating under — with gas production pushing against available takeaway capacity, all it takes is an otherwise minor/routine maintenance event on even one West Texas takeaway pipeline to send regional gas prices spiraling into negative territory. Waha Hub gas prices last week collapsed to their lowest level ever, with intraday trades even going negative — meaning some had to pay the market to take their gas. This wasn’t the first time that’s happened in the Permian — a similar event occurred in late November 2018 — but it was the worst to date and signals a heightened supply glut in the region, at least until the first new takeaway pipeline comes online in the fourth quarter of this year. Today, we explain the recent price weakness in West Texas and implications for Permian basis in 2019.

Monday, 02/11/2019

The dam has broken on the “second wave” of U.S. LNG export projects. ExxonMobil and Qatar Petroleum last week announced a final investment decision on their joint venture liquefaction and export project — called Golden Pass Products — at the brownfield site of the Golden Pass LNG terminal on the Texas side of the Sabine-Neches Waterway. That’s a skipping stone’s throw from Cheniere Energy’s Sabine Pass LNG and Sempra Energy’s Cameron LNG terminals on the Louisiana side of the Gulf of Mexico outlet, as well as a number of other second-wave contenders. With construction slated to begin late next month, the Golden Pass project expects to become operational and begin taking feedgas by 2024. Today, we provide an update on Golden Pass, its potential feedgas needs and how it will be supplied.

Sunday, 02/03/2019

Lower-48 natural gas demand surged in 2018, managing to offset ballooning production volumes and putting the gas market on the razor’s edge going into this winter. Demand growth occurred across all domestic sectors as well as export markets, but was led by increased demand from power generators. Some of that was weather-related. However, there also was a level-shift up in demand on a per-degree basis, meaning more gas was burned than historically at the same temperatures, signaling a gain in gas market share. What were the drivers, and can we expect this growth pace to continue? Today, we take a closer look at the demand components behind the recent growth trends.

Tuesday, 01/22/2019

One of the biggest factors affecting the U.S. natural gas market in 2019 will undoubtedly be the dramatic rise in LNG export demand. The slate of liquefaction and LNG export capacity additions this year will boost U.S. demand for feedgas supply to nearly 9 Bcf/d by the end of the year, almost tripling the 2018 full-year average of 3.1 Bcf/d and close to doubling the December 2018 average of 4.6 Bcf/d, with the lion’s share of that growth happening along the Texas and Louisiana Gulf Coast. Three liquefaction trains — one each at Cheniere Energy’s Sabine Pass and Corpus Christi terminals, as well as one at Cameron LNG — are likely to be fully operational in the first quarter, with five additional trains due in rapid progression later in 2019. That much new gas demand concentrated in one region is bound to disrupt physical flows and pricing dynamics. Today, we wrap up the series with a look at the timing and feedgas routes for the final two facilities: Freeport LNG in Texas and Kinder Morgan’s Elba Island project in Georgia.

Sunday, 01/13/2019

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.

Thursday, 01/03/2019

Feedgas demand for U.S. LNG exports has accelerated in recent months with the addition of new liquefaction and upstream pipeline capacity. The latest export facility contributing to the winter surge in feedgas flows is Cheniere Energy’s Corpus Christi LNG (CCL) in South Texas — the first greenfield LNG export terminal in the Lower 48 and the first such terminal, greenfield or otherwise, in Texas. Train 1 has yet to be commercialized, but already it’s added 0.5 Bcf/d of gas demand to the Texas market through December. The facility sources its gas via a number of legacy interstate and Texas intrastate pipelines, many of which have undergone reversals and expansions in order to serve LNG terminals but also another competing export market: Mexico. How will CCL change gas flows in South Texas? Today, we provide an update of feedgas flows to Corpus Christi, including a closer look at the upstream pipeline routes facilitating those flows.