U.S. liquefied natural gas (LNG) exports were slowly recovering Friday, but the impacts of brutal cold along the Gulf Coast that nearly halted shipments altogether were lingering.
Eighteen empty LNG vessels were floating in the Gulf of Mexico Friday, up from 12 on Thursday, Kpler economist Reid I’Anson told NGI. Another two tankers were diverted away from Cheniere Energy Inc.’s Corpus Christi LNG (CCL) terminal in South Texas to its Sabine Pass LNG plant in Louisiana. Both CCL and Cameron LNG in Louisiana remained offline Friday. Freeport LNG on Quintana Island, TX, was still operating at partial capacity.
However, following disruptions at Gulf Coast ports caused by the unusual winter weather conditions, The Maran Gas Troy left Freeport LNG and the Gaslog Galveston departed Sabine Pass on Thursday, according to Bloomberg ship-tracking data. Along with the Seri Balhaf, which left Freeport LNG on Wednesday, only three tankers have set sail from Gulf Coast LNG terminals since Feb. 14.
LNG traders, brokers and executives expect up to 10 LNG cargoes to be lost because of the disruptions, according to a Bloomberg survey. Energy Aspects analyst James Waddell told NGI on Wednesday that the firm expects between eight and 10 cargoes, or 1 billion cubic meters, to be cut from the global market because of U.S. outages. Those losses are expected to be felt in both Asian and European markets, which remain comfortably supplied.
The extreme cold impacted U.S. natural gas supply more than demand, according to Morgan Stanley analysts. Supply fell by 20% to 75 Bcf/d as the weather impacted production operations. The supply declines, analysts said, have been partially offset by demand disruptions, largely from reduced LNG exports. Total U.S. gas demand fell by 8 Bcf/d during the cold snap, with 70% of the demand decline caused by the loss of LNG exports.
Feed gas nominations to U.S. terminals appeared to be recovering Friday at near 6 Bcf. Deliveries were well below that level throughout the Arctic blast and hit a low point of 2.20 Bcf on Tuesday, according to NGI data.
Morgan Stanley analysts said LNG exports were expected to recover quickly. Temperatures were already rising in Texas and Louisiana on Friday and were forecast to continue climbing through the weekend.
The Electric Reliability Council of Texas, which controls most of the state’s electric grid, ended emergency conditions early Friday, indicating there was enough generation to return to normal operations. About 181,000 people in Texas were still without power Friday afternoon, while another 64,000 didn’t have electricity in Louisiana, according to Poweroutage.us.
Given a warmer forecast and a lack of clarity on longer-term impacts from the storm, Henry Hub prices fell on Thursday. The March contract shed 13.7 cents to settle at $3.082/MMBtu on Thursday and finished lower at $3.069 on Friday.
In North Asia, spot prices remained steady around $6.00/MMBtu as the region continued to assess the impact of U.S. outages. In Europe, prices fell on a warmer forecast and an improving outlook for U.S. LNG imports.
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