Feed gas deliveries to U.S. export terminals have fallen significantly in recent days and are likely to remain low this week as inclement weather on the Gulf Coast and maintenance are slowing liquefied natural gas (LNG) production.
Feed gas deliveries to Cove Point in Maryland have fallen to zero as the terminal started annual fall maintenance that has lasted about three weeks in previous years. The Corpus Christi Pipeline will also start a scheduled meter expansion on Thursday that’s expected to cut receipts by 510 MMcf/d through Sunday, according to Genscape Inc. The Corpus Christi export facility will be forced to source gas from other interconnects during the work.
Meanwhile, Tropical Storm Beta, now a tropical depression, came ashore late Monday, bringing heavy rains and flooding to parts of the Texas Coast. The Cameron, Corpus Christi, Freeport and Sabine Pass export terminals were all in the storm’s path as it neared land.
Overall, U.S. feed gas nominations had dropped by about 1 Bcf day/day on Tuesday, primarily due to a decline in deliveries to the Sabine Pass terminal, Genscape said. Natural Gas Pipeline Co. of America LLC declared a force majeure ahead of the storm at a compressor station in Cameron Parish, LA, cutting flows to Sabine Pass in recent days. Genscape also noted that flows to the terminal have declined on other pipelines as well.
Beta also forced vessels docked at Freeport LNG and Sabine Pass to return to sea, EBW Analytics Group said.
Meanwhile, Sempra Energy’s Cameron LNG terminal in Louisiana remains offline as it has been since Hurricane Laura knocked out power and caused other damages there late last month. While electricity has been partially restored and restart activities have gotten underway at the facility, the Army Corps of Engineers is targeting Oct. 8 to finish dredging activities in the Calcasieu Ship Channel that will allow large vessels to pass through.
“If adequate storage remains available in Cameron’s LNG storage tanks, Sempra may be able to begin producing LNG several days before the first vessel arrives — possibly as early as next week,” EBW said in a note to clients on Tuesday. “Until the schedule for ramping up all three trains becomes clearer, however, the near-month natural gas futures contracts may bounce up and down based upon the status of these trains.”
The October Henry Hub contract settled at $1.835/MMBtu on Monday, plunging by more than 20 cents day/day and marking the first time since early August that the prompt month closed below $2.000. Weaker LNG volumes, potential demand destruction caused by Beta and milder forecasts for parts of the United States were likely to blame for the drop. The October contract finished at $1.834 Tuesday.
Prices were muted overseas as well to start the week, as European storage inventories are nearly full at 94% of capacity. But the forward curve looks better and continues to show U.S. LNG in the money in both regions.
Bloomberg said Monday a survey of traders found that they expect fewer than five cargoes to be cancelled at U.S. terminals in November, a big improvement from monthly double-digit cancellations over the summer, when more than 100 cargoes weren’t lifted as the arbitrage window with Asia and Europe was shut.
In Europe, more gas is likely to start flowing into Ukraine after the gas transmission system operator there said Monday that it has finished work on the Budnice interconnection, a critical outlet for moving volumes from Slovakia into the country that allows traders to more easily access massive storage facilities there. European traders have increasingly turned to Ukraine for additional natural gas storage amid a boom in LNG imports.
In other news, Cyprus, Egypt, Greece, Italy, Israel and Jordan have formed an organization to better cooperate on natural gas resources in the Eastern Mediterranean. Turkey, which has clashed with the new group’s members over claims to the resources, has not been included in the East Mediterranean Gas Organization.
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