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FOB cargo values drop for third week, remain historically high

US Gulf Coast FOB daily export cargo values slid for the third straight week Jan. 4-11 amid bearish price trends in destination markets, while imports into the Northeast were being buoyed by a recent cold front that lifted regional demand.

Lower shipping rates, which have fallen dramatically over the last month and a half, and delivered prices that remained high by historical standards continued to incentivize near full dispatch at export terminals.

Average daily feedgas deliveries to the six major US liquefaction facilities in operation and a seventh that is undergoing commissioning rose week on week, implying increased utilization.

“Finally, I think the fundamentals are clear to everyone,” Charif Souki, executive chairman of Driftwood LNG developer Tellurian, said during a podcast posted on the company’s website Jan. 11. Tellurian stuck to its target to begin full construction in the second quarter.

S&P Global Platts assessed the Gulf Coast Marker for February at $24.75/MMBtu on Jan. 11, down 55 cents /MMBtu from the previous day and $1.30/MMBtu from the beginning of the week. Three weeks earlier, on Dec. 21, GCM hit an all-time high of $54.95/MMBtu. Since then, delivered prices in Europe have cratered.

Even so, US FOB cargo values remain up more than fourfold from a year ago, as demand has surged and global supplies have tightened.

US liquefaction terminals continued to show record levels of feedgas nominations, averaging 12.13 Bcf/d during the week of Jan. 4-11, Platts Analytics data showed. Those levels were a slight uptick week on week.

Despite the suspension of pilot service Dec. 10 along the channel that feeds Cheniere Energy’s Sabine Pass terminal in Louisiana, the facility nominated on average 4.26 Bcf/d during the most recent week. Pilot service was operating normally Jan. 11.

The rise in feedgas demand there outweighed slight declines in average daily flows during the week to Sempra Energy’s Cameron LNG in Louisiana, Kinder Morgan’s Elba Liquefaction in Georgia and Berkshire Hathaway-operated Cove Point Liquefaction in Maryland. Elba’s Unit 2, which was shut down following a fire in May 2020, resumed full service late last month, a spokesperson, Katherine Hill, said in an e-mail responding to questions.

“Deliveries to Elba can be impacted by other variables occurring on any given day, such as pipeline imbalance makeup and other scheduling-related decisions made by our customer,” Hill said. “This means that the natural gas reported as deliveries to Elba is not always an exact representation of LNG production.” The facility is backed by a long-term supply contract with Shell.

Panama Canal congestion ticked up during the week, with the maximum wait on Jan. 11 for unreserved LNG tankers transiting the passageway at seven days northbound and three days southbound, according to the Panama Canal Authority.

Low temperatures

Meanwhile, a recent cold front in the US Northeast boosted spot gas prices at Boston’s hub to levels that attracted LNG imports. That is common during the winter, with limited pipeline capacity preventing the region from serving gas demand solely with domestic supplies.

New England imported an LNG cargo, the Cadiz Knutsen, at the Everett LNG import facility near Boston on Jan. 8. The cargo boosted LNG sendout to a winter high of 495 MMcf/d on Jan. 11, as overall Northeast demand reached 35.5 Bcf/d, the highest daily demand level so far this winter, Platts Analytics data showed.

Upon arrival, Algonquin city-gate spot prices fell from $23.09/MMBtu on Jan. 7 to $16.05/MMBtu during trading on Jan. 11. Forward prices remained flat on the week, indicating the cargo and additional supply was expected.

The NYMEX Henry Hub prompt-month contract has gained nearly 40 cents over the last three trading sessions, trading at $4.18/MMBtu as of early afternoon local time in the US.
Source: Platts

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