Total U.S. LNG export capacity is around 12 Bcf/d, including the still-commissioning-but-nearly-complete Calcasieu Pass. About 13.5 Bcf/d of U.S. natural gas supplies, or feedgas, is required to produce that much LNG, but feedgas demand has averaged just 10.5 Bcf/d over the past week despite still-soaring global gas prices and an undersupplied global LNG market. Two U.S. terminals are currently offline: Freeport LNG, which has been out of service since an explosion and fire in June, and now Cove Point LNG, which shut for annual maintenance October 1. Beyond those outages, which have taken about 2.75 Bcf/d of demand out of commission, LNG feedgas volumes have been extremely volatile, swinging as much as 2 Bcf/d within a week. Don’t expect this to last, however — with winter approaching, the return of both Freeport and Cove Point on the horizon, and the full startup of Calcasieu Pass in sight, feedgas demand will likely rise to new heights and soon consistently top 13 Bcf/d. In today’s RBN blog we take a closer look at the recent volatility in LNG feedgas and the potential demand coming this winter.
Posts from Lindsay Schneider
The world needs more LNG and the U.S. is answering that call. Two U.S. liquefaction projects, Venture Global’s Plaquemines LNG and Cheniere’s Corpus Christi Stage III, have already reached a final investment decision (FID) on a combined 23.3 MMtpa (3.1 Bcf/d) of export capacity, which will be online by mid-decade. But by the looks of it, we are just getting started. Next up could be NextDecade’s Rio Grande LNG, which has sold 75% of its first two trains’ capacity — enough to take FID, possibly by the end of the year. If it moves forward, not only will the project add another 10.8 MMtpa (1.43 Bcf/d) or more of export capacity to the Gulf Coast, it could also come with a new carbon capture and sequestration (CCS) facility, which has long been a selling point for the project. In today’s RBN blog, we continue our series on the U.S. LNG projects most likely to move forward, this time with a look at Rio Grande LNG.
It’s been another tumultuous few months for natural gas prices, particularly amid what European Commission President Ursula von der Leyen has called Russia’s war on Europe’s energy and economy. Europe is staring down aggressive curtailments of Russian gas supplies and rising consumer utility bills, necessitating austerity measures and beyond to bail out consumers and utilities and prevent a dangerous shortfall this winter. Prices in continental Europe have now topped $20/MMBtu for a year, higher than the previous single-day record. On top of the elevated prices, outrageous spikes higher and lower have become a semi-regular occurrence as the gas market struggles to find balance. And high prices and volatility are not going anywhere anytime soon as Europe braces for a winter with little or even no Russian gas. In today’s RBN blog we look at European gas prices, the latest energy policy proposal from the EC and how U.S. LNG exports fit into the ongoing crisis.
The momentum for U.S. LNG right now is powerful. With Europe’s efforts to wean itself off Russian natural gas boosting long-term LNG demand and Asian consumption expected to grow even further, there has been a strong push for new LNG projects in North America. So far, that has helped propel two U.S. projects, Venture Global’s Plaquemines LNG and Cheniere’s Corpus Christi Stage III, to reach a final investment decision (FID). With these two projects getting a green light, total export capacity in the U.S. will be at least 130 MMtpa — or 17.3 Bcf/d — by mid-decade. That top-line export capacity could be much higher, however. There are currently eight U.S. Gulf Coast pre-FID projects with binding sales agreements, and a handful of projects that are fully subscribed in credible non-binding deals. If all those projects go forward, it would add a staggering 86 MMtpa (11.4 Bcf/d) of export capacity to the U.S., pushing the total toward 30 Bcf/d, or 225 MMtpa. In today’s RBN blog we look at U.S. LNG under development, how high export capacity could go, and the implications for the U.S. natural gas market.
Escalating Russian aggression and LNG supply shortfalls, exacerbated by outages in the U.S. and Australia, have put the pressure back on international gas markets and sent prices in Europe and Asia back toward their winter highs. Around the world, high prices have pushed some end users out of the LNG market and spurred on the global, cross-commodity energy shortage that has had utilities and governments scrambling, sometimes unsuccessfully, to keep the power on. The European Union (EU) is pushing its members to reduce gas consumption by 15% through winter and parts of Europe face austerity measures. Some European countries are turning back to coal generation as the continent prepares for the prospect of a winter with less — or potentially even no — Russian gas. In today’s RBN blog, we look at where things stand in the international gas market and the ramifications for the winter ahead and beyond.
Europe’s push to reduce and eventually eliminate its reliance on Russia for natural gas has pushed LNG imports back into the forefront of Europe’s long-term energy plan. This year, with European natural gas prices trading above Asian prices, the continent has been able to attract an incredible amount of LNG, with imports at record levels this winter and sitting just shy of those records this spring. That helped mitigate some of the risks to energy reliability from Russian aggression, at least until the Freeport LNG outage and the latest Russian gas curtailments, but import capacity in Europe was maxed out last winter and more LNG imports can’t happen in the long term without more import capacity. Most of the LNG terminals in Europe are operating at full capacity or don’t have enough market access on the other side of the pipe to take more. While plans to build new import terminals are underway, those take time, and lots of it, so Europe is also pursuing a more immediate option, floating storage and regasification units (FSRUs) — basically, an LNG import terminal on a ship. In today’s RBN blog, we take a look at all things FSRU, from what and where they are to the recent deals with European offtakers.
Freeport LNG is expected to be offline for an extended period following last week’s explosion and fire at the export terminal, leaving the global gas market even more undersupplied than it already was. The outage cuts U.S. export capacity by about 2 Bcf/d at a time when Europe is still taking in huge volumes of LNG to offset declines in Russian supplies and bolster storage ahead of winter. This is all happening as another large exporting nation, Australia, is facing a critical winter energy crisis of its own and South American demand is headed toward its seasonal high, straining an already tight market. Today’s RBN blog continues our series about the ongoing Freeport outage, this time looking at the impact to the global gas and LNG markets.
An explosion June 8 at Freeport LNG, the 15.3 MMtpa (2 Bcf/d) export terminal on Quintana Island, TX, has knocked it offline at a time when the global market is already facing tight conditions because of the war in Ukraine and other factors. The explosion, fire and subsequent shutdown — which fortunately did not include any injuries — sent U.S. natural gas tumbling off recent highs and shot global gas prices higher. Much is still unknown about the developing situation, including exactly how long the outage will last. While Freeport has said it expects the terminal to be offline for at least three weeks, multiple regulatory agencies have investigations underway and will likely need to approve a return to service. In today’s RBN blog, we look at the latest news from Freeport LNG and run through the potential market implications, starting with impacts to the U.S. gas market.
The momentum for North American LNG right now is incredible. With Europe’s efforts to wean itself off Russian natural gas supplies boosting long-term LNG demand in the continent and Asian demand expected to grow even further, there has been a strong push for new LNG projects in the U.S., Mexico and Canada, with enough commercial support and capital present to advance at least some of them to construction and operation. Venture Global on May 25 reached a final investment decision on Phase 1 of Plaquemines LNG, the first North American project to take FID since Energía Costa Azul LNG in 2020. But it’s unlikely to be the last. Cheniere’s Corpus Christi Stage III is likely to follow in the coming months and support is coalescing around a handful of other projects too. So far this year, more than 20 MMtpa of long-term, binding commitments tied to new North American LNG capacity have been signed, propelling a new wave of LNG projects towards FID. In today’s RBN blog, we take a look at the trends in the recent commercial commitments.
It’s been more than two months since Russia invaded Ukraine, sending global energy markets into chaos as most of Europe tries to figure out a way to quickly reduce its reliance on Russian supplies. The initial response from the U.S. and its allies was a slate of economic sanctions, but those largely left natural gas out of the equation, as parts of Europe are so dependent on Russian gas that stopping the flows would pose serious threats to the continent’s economies and energy security. Now, with no sign of an end to military hostilities and continual increases in the scope of sanctions, Russia is responding by starting to shut off flows to European countries that refuse to pay for their gas in rubles. Where is this headed? In today’s RBN blog, we look at the latest escalation, what led to this point and where the market might go from here.
Russia’s invasion of Ukraine has pushed U.S. LNG into the spotlight as Europe seeks to wean itself off Russian natural gas. In the short term, U.S. LNG to Europe is constrained by liquefaction capacity on the LNG output side but also by Europe’s own import capacity and pipeline grid. Very little can be done to quickly increase global LNG production, and while many export terminals will operate at peak capacity for longer to boost output, LNG terminals take time to build, so capacity for this year and the next few years is already set. Further out, however, there is no shortage of new projects hoping to capitalize on the current clamor for LNG and reach a final investment decision (FID), and the U.S. could be headed toward its biggest year for new LNG capacity ever. In today’s RBN blog, we continue our series examining key U.S. projects, turning our lens to what is arguably the most discussed and reported-on project on our list — and one that is moving forward potentially without a formal FID — Tellurian’s Driftwood LNG.
U.S. LNG exports are at an all-time high, driven primarily by new capacity online or commissioning, but the existing terminal fleet has also been pushing production to the max as offtakers, particularly in Europe, hunt for every spare molecule they can find. Every single terminal in the U.S. set a new monthly export record in either December or January. But is it enough? With the ongoing and tragic war in Ukraine threatening energy security and reliability in Europe, where gas storage inventories are already running low, the focus increasingly turns to LNG to replace at least some of the gas it typically imports from Russia. It sounds great in theory, and in the long term more LNG capacity will be added, but for now, we’re stuck with the infrastructure we’ve got, putting a ceiling on both how much Europe can take and how much exporters, including the U.S., can send. In today’s RBN blog, we look at the potential for incremental LNG exports from the U.S. to Europe to help offset Russian gas.
Cheniere Energy is by far the largest owner and operator of U.S. LNG capacity, with 45 MMtpa across nine liquefaction trains at two terminals: the six-train Sabine Pass facility in Louisiana and the three-train Corpus Christi terminal in South Texas. But when Sabine Pass Train 6 was placed into service earlier this year, it marked the first time since 2012 that Cheniere had no capacity under construction. The pause may not last long. With global demand for LNG super-strong and prices even stronger — the April Dutch Title Transfer Facility (TTF) contract hit a record $72.53/MMBtu on March 7 — and Russia’s invasion of Ukraine threatening future supplies of Russian gas into Europe, Cheniere may be poised to make a final investment decision (FID) on the next stage of its Corpus Christi LNG. In today’s RBN blog, we continue our series on the next wave of U.S. LNG projects with a closer look at Cheniere’s Corpus Christi Stage III.
Even as winter starts to wind down, global natural gas prices remain elevated as rising tensions between Russia and the Western world have destabilized European energy markets and pushed LNG, and U.S. LNG in particular, to center stage. From a markets perspective, the story of the past year has been high global gas prices — a strong incentive for LNG producers to push production facilities to operate at peak capacity and produce additional cargoes. The tight market has also spurred demand for new long-term sales and purchase agreements (SPAs), creating momentum for a potential new wave of LNG development. But while gas prices in Europe and Asia have been elevated all year, they have not been elevated evenly. The Asia-Europe price spread has swung dramatically from favoring Asia last spring and summer to favoring Europe this winter, and U.S. export destinations have swung with it. Last summer, almost no destination-flexible LNG produced in the U.S. was landing in Europe and now Europe is consuming U.S. LNG at record levels. In today’s RBN blog, we look at how global price spreads impact U.S. LNG export destinations and what the strength in European demand means for the future of LNG development.
It’s expected to be a big year for U.S. LNG. The U.S. was the top monthly exporter of LNG for the first time in December 2021 and is expected to hold onto that crown as new capacity at Sabine Pass and a new terminal, Calcasieu Pass, begin service this year. The chaos of European gas markets has made U.S. exports particularly attractive, especially after a year or more of high global demand, sky-high global gas prices, and an undersupplied market that has left offtakers clamoring for more. Last year saw those offtakers come back to the negotiating table for long-term sales and purchase agreements (SPAs) from new U.S. LNG capacity and several projects now have a realistic path to a positive final investment decision (FID) in 2022. In today’s RBN blog we begin a series taking a closer look at some of the projects most likely to reach FID this year, starting with arguably the most likely next contender, Venture Global’s Plaquemines LNG.
