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Factbox: North American LNG sector under coronavirus stress

Trade-flow shifts and uncertainty that the coronavirus outbreak has created are weighing heavily on every aspect of the LNG sector and, more broadly, on the outlook for near-term supply of and demand for natural gas.

Longer-term challenges also are coming into clearer focus, as work crews on infrastructure projects currently being built are scaled back and commercial support for new projects under development dries up. Exports from existing terminals face the prospect of more cancellations or force majeure declarations from customers.

The interconnectedness of supply chains means that what happens in North America will have an impact on what happens in Europe and Asia, and vice versa.

Here’s a look at the current picture:

PRICES
**US spot gas prices plunge to multi-year lows; the Henry Hub cash price tumbles 16.10 cents Wednesday morning to $1.654/MMBtu, the lowest price since March 9, 2016, when Henry Hub settled at $1.575/MMBtu

**Cheaper prices reduce input costs for liquefaction facilities, but can lower margins for drillers

**Production shut-ins possible in some basins as cash prices fall near operators’ cash costs: Platts Analytics. Most operators, aside from Cabot, have at least 50% of planned 2020 production volumes hedged; Average volume hedged is 64% at average price of $2.66/MMBtu, providing operators some cushion

**Total US gas stocks up 63.8% from year-ago levels to 2.043 Tcf for week ended March 6, according to the Energy Information Administration

**LNG prices in Northeast Asia, as represented by Platts JKM, recover steadily since bottoming out at $2.713/MMBtu February 14; Spot price of cargoes into the region for delivery in May was assessed Tuesday at $3.538/MMBtu Tuesday

**Pacific and Atlantic shipping rates were assessed higher week on week Wednesday; Pacific shipping rate rises to $37,000/day from $35,000/d; Atlantic shipping rate increases to $45,000/d from $37,000/d: Platts Analytics

OPERATIONS
**US LNG terminals continue to produce, with utilization robust, although down from record highs; feedgas flows to terminals totaled 8.3 Bcf/d Wednesday, 300 MMcf/d higher than Tuesday, but down 1.3 Bcf/d from a record 9.6 Bcf/d registered January 31

**LNG Canada cutting by half number of workers at site of up to $31 billion under construction export facility in British Columbia; company not disclosing total number remaining at site

**Cheniere customers generally have until March 20 to notify of any May cancellations; two cargoes canceled previously for April loading — one from Sabine Pass in Louisiana, one from Corpus Christi in Texas; Company asks some staff to work from home; construction at two terminals not affected “at this time”: spokesman

**Coast Guard imposes new restrictions on vessels docking at US ports; vessels destined for a US port required to report to the Centers for Disease Control and Prevention any sick or deceased crew/passengers during 15 days prior to arrival at port; LNG loadings/deliveries could see impacts

PROJECTS
**Cheniere no longer publicly targeting first-half 2020 FID on Texas midscale expansion; decision expected this year, although it will redeploy capital to other initiatives if certain parameters for project not met; Proposed up-to-9.5 million mt/year Stage 3 expansion at terminal near Corpus Christi would involve midscale units

**Magnolia LNG project in Louisiana seeking lifeline through takeover of parent company by Sinagporean investor

**NextDecade mum on current status of Rio Grande LNG project; shares have been plunging

**Commissioning of remaining units at Kinder Morgan’s Elba Liquefaction in Georgia continues

CONTRACTING
**Tellurian cuts 38% of workforce, seeks loan extension to allow more time to commercialize Driftwood LNG

**Pembina cuts 2020 capital spending plans by $900 million to $1.1 billion, defers some projects; No mention of Jordan Cove LNG status, or status of commercial efforts

**China shut off from new contracting with US exporters and developers: Annova LNG chief

**Sempra has not yet announced sufficient contracts to support Port Arthur LNG, as third-quarter FID target looms; FID on Energia Costa Azul project in Mexico was planned for as early as next week; No word on any delays
Source: Platts

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