Nuts Situation – Understanding the Volatile Matchmaking Ranging from LNG and Global Gas Locations

Nuts Situation – Understanding the Volatile Matchmaking Ranging from LNG and Global Gas Locations

It’s been an incredibly wild year for U.S. LNG exports. In the past year, global gas prices have seen both historic lows and highs, as markets swung from extreme demand destruction from COVID-19 for much of last year, to supply shortages by late 2020 and into early 2021 due to maintenance outages, weather events, Panama Canal delays, and vessel shortages. The U.S. natural gas market has also dealt with its share of anomalies, from a historic hurricane season in 2020 to the extreme cold weather event last month that briefly triggered a severe gas shortage in the U.S. Midcontinent and Texas and left millions of people without power for more than a week. Given these events, U.S. LNG feedgas demand and export trends have run the gamut, from experiencing massive cargo cancellations and low utilization rates to recording new highs. Throughout this incredibly tumultuous year, U.S. LNG operators have had to adjust, managing the good times and bad and proving operational flexibility in ways that will serve them for years to come. Here at RBN we track and report on all things LNG in our LNG Voyager report, and we’ve been hard at work enhancing and expanding our coverage to capture the rapidly evolving global and domestic factors affecting the U.S. LNG export market, including terminal operations, marginal costs and export economics, and international supply-demand fundamentals. S. LNG has changed in the past year and trends to watch this spring. Warning! Today’s blog is a blatant advertorial for our revamped LNG Voyager Report.

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To fully grasp how much the new You.S. LNG export industry has evolved before season, we must go back from the 1 year to , until the pandemic consequences got set in. It can be tough to envision those individuals pre-COVID weeks today, thus help us set the fresh new stage. The newest U.S. got only accomplished adding twenty five MMtpa (step three.34 Bcf/d) out of liquefaction and export skill throughout 2019 and you may early 2020. Feedgas deliveries and you will LNG exports during this period was basically foreseeable to have the absolute most area, ramping right up since liquefaction trains had been finished after which constantly working close full utilization of potential since the equipment were delivered on the internet and commercial deals banged into the. So, into the February out of this past year, feedgas demand are near just what was then number levels, with little manifestation of volatility outside routine maintenance events. It seemed like the LNG you’ll create was expand – which was a narrative LNG builders was indeed ready to give.

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Then COVID-19 hit, decimating global demand, sending global gas prices to all-time lows and turning the economics for exporting U.S. LNG upside down for the first time since early 2016 when the first train at Cheniere Energy’s Sabine Pass terminal began exporting. We discussed the unraveling of the U.S. LNG export market that followed in a number of blogs last spring and summer, including Crack It in my opinion Lightly, Undone and LNG Disturbance. The upshot is that offtakers of U.S. LNG began cancelling cargoes and, by summer, feedgas demand plummeted (dashed blue oval in Figure 1). Feedgas deliveries in July and August averaged just 3.66 Bcf/d, or about 40% of where they were in the first quarter of 2020 and just 42% of capacity at the time. Cancellations lessened by late summer as pandemic lockdowns eased, first in Asia and later Europe, and global prices improved. But just as U.S. LNG exports were poised to begin a recovery, a record-setting hurricane season wreaked havoc on the operations of Gulf Coast LNG terminals, particularly in Louisiana (see Your Twist Myself Bullet). Throughout the fall, nearly every U.S. LNG terminal faced some kind of outage, port closure, or shut-in for maintenance.

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