NGI The Weekly Gas Market Report
Dominion Cove Point plans to shut down its liquefied natural gas (LNG) terminal in Lusby, MD, for the entire month of June to carry out maintenance related to the expansion of its facilities. A major customer of the terminal believes the impact of the temporary closure of the 1 Bcf/d plant on the U.S. gas market will be minimal.
The maintenance will involve “the construction related to the expansion. We’re making all the connections for the new facilities, which include two new storage tanks, new regasification facilities and vaporization. We’re connecting that all together,” said Dan Donovan, a spokesman for Richmond, VA-based Dominion Resources, parent of Dominion Cove Point. The terminal primarily serves East Coast markets.
“We think June is a good month [for a maintenance shutdown]. When you get into July and August, you get into peak electricity generation. Our customers were involved in the decision about June,” he noted.
“Our shippers knew this was coming so they could plan accordingly” and possibly divert shipments of LNG to other terminals in the United States, Donovan said. The terminal’s customers reportedly plan to bring in large amounts of LNG in April and May — prior to the maintenance shutdown — and “tons” of LNG in July, when the terminal opens.
“We have made arrangements with our [LNG] suppliers to cope with the situation,” said Kurt Georgsen, president of Statoil Natural Gas LLC. “We don’t believe June [maintenance] will have an impact on the market. It’s not a high-demand month.” He said “not necessarily” when asked if Statoil planned to divert LNG shipments to other U.S. terminals. Statoil is a major customer of Dominion Cove Point, along with Shell and BP.
“I don’t think it’s a big deal” for the gas market, said one knowledgeable source. “It’s [close to] summertime,” when gas usage is comparatively lower than what it is in the winter, and “there’s three other [terminal] ports” for LNG importers to access in the U.S., he said.
Contrary to Statoil and Dominion Cove Point’s assessment, the current issue of World Gas Intelligence said the scheduled maintenance may be “ill-timed” because U.S. natural gas prices are expected to remain steady during the downtime, while demand for LNG in Asia and Europe is expected to remain lower, making it a good time for the U.S. to import LNG at lower prices.
So far this month the Cove Point LNG terminal has been processing 710 MMcf/d on average, running at a 62% utilization rate. The plant’s sendout capacity is approximately 1.02 Bcf/d.
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