Feed gas deliveries to Cheniere Energy Inc.’s Sabine Pass liquefied natural gas (LNG) terminal ramped up over the holiday weekend and were at nearly 1.5 Bcf on Tuesday, pushing U.S. export demand to levels not seen since before Hurricane Laura made landfall Aug. 27.
Feed gas deliveries scheduled for delivery to all U.S. LNG export terminals stood at nearly 5 Bcf on Tuesday. Cameron LNG, which took a direct hit when the hurricane came ashore in Louisiana remains offline with no date set to restart operations as the facility has to contend with damaged power lines and other issues in Cameron Parish. Neither Cameron nor Sabine Pass has loaded a cargo since Aug. 23.
Genscape Inc. said its monitors first detected an ethylene engine online at Sabine Pass Train 2 on Friday, adding Tuesday that all of the facility’s liquefaction trains are online. It remains unclear when Cheniere will begin loading vessels again.
“Cheniere has built up a large backlog of cargoes to be loaded later this month,” said EBW Analytics Group. “While the timing of ramp up is still uncertain, during the next 5-7 days, feed gas flows could increase by as much as 3-4 Bcf/d and stay high through the end of September.”
Bloomberg reported Tuesday that two vessels are marked to arrive at Sabine Pass on Sept. 11 in an indication that operations could return to normal soon.
U.S. LNG pipeline receipts increased in August by 30% compared to July and averaged 4.3 Bcf/d before Hurricane Laura made landfall as the global gas market tightened, according to the Energy Information Administration. Fewer U.S. cargo cancellations are expected in October and demand for the super-chilled fuel is picking up along with stronger economics for U.S. volumes as prices firm along the forward curve.
But the lack of certainty surrounding Cameron’s restart and loadings at Sabine, along with mixed weather forecasts, pushed U.S. gas futures lower Monday. Gains in European gas benchmarks also slowed as the week got underway, dragged down by a slide in oil prices and the prospect of more LNG deliveries with Sabine Pass ramping back up, as some of the signals that have triggered higher prices in recent weeks wane and market challenges remain evident.
LNG prices in Northeast Asia, which had been tracking a rally in the European market, also retreated as more supply has become available.
Global demand again declined in August as the Covid-19 pandemic has yet to ease its grip on the world’s economy. LNG exports were 31.2 million tons (Mt) last month, down from 32.5 Mt in August 2019, according to ClipperData. East Asia took in 17 Mt of LNG in August 2020, lower than the 17.6 million tons taken in during August 2019.
Bloomberg New Energy Finance (BNEF) noted that China’s intake rose 9.2% sequentially in August, the second consecutive month of increasing imports after a drop in June.
“August’s higher LNG shipment volume may be the outgrowth of a pickup in industrial activity and rising inventory, in our view,” BNEF analyst Henik Fung said of China, the world’s second largest importer. “Yet it may be too soon to declare it sustainable, especially with the looming risk of subsequent virus outbreaks.”
In other news, Eagle LNG Partners said Tuesday that a Swedish ship was the first non-U.S. flagged vessel to be fueled with LNG in the United States. Eagle delivered the fuel from its on-site storage facility at Talleyrand Marine Terminal in Jacksonville, FL.
There were also news media reports last week that Saudi Arabia Oil Co., aka Saudi Aramco, was reviewing its decision last year to take a 25% stake in Sempra Energy’s Port Arthur LNG export terminal proposed for Texas. The review reportedly comes as Saudi Aramco looks to pay a steep annual dividend for investors. While Saudi Aramco has not commented on the reports, Sempra has said it is still working with the company and others to move the project forward.
A final investment decision on the 13.5 million metric tons/year Port Arthur facility was delayed earlier this year and is now expected in 2021.
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