LNG exports from the US, one of the top three exporters, have completely halted due to the recent record-breaking winter storms.
No laden LNG tankers have been able to leave the US since Feb. 14 and multiple tankers remained berthed at export facilities in the US Gulf, data from Platts ship tracking software, cFlow.
The movement of vessels into Gulf Cost ship channels has been severely hampered by critical personnel being unable to access ports due to the inclement weather. At the time of writing, there were at lease six tanker in holding patterns in the gulf, with another five making their way into the region.
The delay in cargo loadings from the US, which is a major exporter to both Asia and Europe, had yet to significantly rile the LNG market. Multiple LNG traders that spoke to Platts expected the delays to be short-lived and for normal loadings to resume once the polar vortex subsides.
Weather conditions are forecast to begin improving in the USGC by as early as Feb 19, when temperatures should clear freezing.
LNG Feedgas demand falls below 3 Bcf/day
Shipping and operational constrains have seen aggregate feedgas flows to all six US LNG plants fall to as low as 2.2 Bcf on Feb. 16, compared to the roughly 10 Bcf/day average seen previously in February.
Feedgas flows to Texas-based Freeport LNG fell to zero Bcf/d on Feb 16 after declining steadily for five days. Flows were curtailed after the governor of Texas asked that production at the plant be curtailed under the state’s disaster declaration, according to a report from Bloomberg. A representative from Freeport LNG declined to comment on the situation.
Louisiana-based Cameron LNG, meanwhile, had issues with their power supply on Feb. 15, and saw feedgas flows almost completely halt on Feb. 16, before bouncing back close to normal levels the following day. A spokesperson from the company said that “Power has been restored to the site and the Cameron LNG crew is working to ensure we can safely restart operations,” in an emailed statement.
The country’s largest LNG export facility was also operating at about half its normal rate on Feb. 17, with feedgas nominated just below 2 Bcf. Force majeure was declared at a compressor station linked to major pipeline supplying gas to Sabine Pass at the start of the week.
LNG Feedgas being sold in grid
With LNG exports hampered and gas prices at some US hubs crossing into the triple digits, gas that was formerly earmarked for LNG exports is being sold in gird, according to traders.
Platts daily prices for Katy and Houston Ship Channel, for example, were marked at $359.14/MMBtu and $400/MMBtu respectively on Feb. 17. NYMEX Henry Hub futures for March meanwhile, were comparatively only slightly elevated over pre-storm levels, reaching $3.129/MMBtu on Feb.16.
“We’ve heard of that happening from last week” said one Houston-based gas trader speaking about LNG feedgas being sold into the US system. “With [daily prices] at more than $150 over first of month levels, I expect people are behaving economically.”
Export complications at facilities preventing gas from reaching foreign ports was also causing some LNG feedgas to be sold into grid, according to an Atlantic-based LNG trader.
One prompt-loading LNG cargo was heard cancelled from a USGC facility by a European major, according to multiple sources. Details of the cancellation, however, could not be gleaned.
LNG prices yet to react to US delays
LNG prices globally have yet to react to the cargo loading delays in the US. LNG markers for Asia and Europe have actually declined since the onset of the situation, with the Platts JKM and Northwest Europe marker both falling as conditions in the US worsened. This was also reflected by the Platts Gulf Coast Marker, which has been falling since Feb. 15, and was last assessed at $4.65/MMBtu on Feb. 17.
Trading sources echoed the bearish sentiment reflected by the price markers, indicating that several major market participants were currently long cargoes.