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Gas flows to US LNG plants recover as deep freeze ends

Feedgas deliveries to U.S. LNG export facilities rebounded sharply after the polar blast in Texas and other parts of the Southern U.S. that had disrupted flows to the Gulf Coast facilities.

Total U.S. deliveries had bottomed out at about 2.2 Bcf/d on Feb. 16, but by Feb. 21, the flows had reached about 7.9 Bcf/d, according to pipeline flow data from S&P Global Market Intelligence. The volume of deliveries Feb. 21 was the greatest in more than a week but remained below earlier flow levels that had exceeded 10 Bcf/d as recently as Feb. 8.

The increased flows were largely driven by Cheniere Energy Inc.s Sabine Pass LNG terminal in Louisiana, Sempra Energy’s Cameron LNG facility in Louisiana and Cheniere’s other LNG plant in Corpus Christi, Texas. Flows remained low to the other LNG export plant in Texas, the Freeport LNG Development LP facility south of Houston.

Last week, extremely low temperatures crippled gas-fired electric power generators, which faced gas pipeline supply shortfalls and frozen instrumentation. In the face of widespread power outages and a deepening energy crisis, Texas Gov. Greg Abbott on Feb. 17 took the extraordinary step of ordering that no natural gas be shipped across state lines for five days before being offered for sale to Texas power generators.

Abbott’s order prompted questions about his constitutional authority to interfere with interstate commerce. Some market observers said it could affect Texas’ reputation as a reliable supplier of gas, especially with Mexico. U.S. gas flows to Mexico had surged even after the order. Others questioned whether the order would significantly impact gas flows days into a crisis that sent Texas prices soaring.

“I don’t suspect the order restricting exports will have a lasting impact — in part because it was so brief,” Nikos Tsafos, a senior fellow with the energy security and climate change program at the Center for Strategic and International Studies, said in an email. “But I am expecting more discussions about the reliability of U.S. LNG. Between hurricanes, bottlenecks in the Panama Canal and now the freeze, it’s hard not to rethink your contingency plans and your logistics if you’re buying U.S. LNG.”

Jason Feer, head of business intelligence at Poten & Partners, compared the disruption and the fast recovery of feedgas deliveries to the way Gulf Coast LNG facilities have responded to hurricanes in the past.

“It was really difficult for a lot of people, and businesses of all descriptions faced a lot of challenges in dealing with it, but I don’t see it as a game-changer kind of event for lifters or potential customers of U.S. liquefaction projects,” Feer said. “Everybody signs into U.S. volumes knowing that things like hurricanes can affect output, knowing things like weather can affect deliveries. Lifters go into these deals with their eyes open.”

Even before Abbott’s order, the LNG facilities in Texas had already complied with a request from the governor’s office for them and other large industrial users of gas and electricity to curb their consumption so supplies could be used for homes, according to Charlie Riedl, the executive director of the Center for Liquefied Natural Gas, a Washington, D.C.-based trade group.

By noon Feb. 19, the Electric Reliability Council Of Texas Inc. reported that the state’s power grid had been restored to normal operations.
Source: Platts

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