US LNG Weekly: Production surges amid new capacity, strong pricing environment
US LNG feedgas surged during the week of Nov. 30-Dec. 7 as a sixth train at Cheniere Energy’s Sabine Pass terminal ramped up production and Venture Global LNG’s Calcasieu Pass conducted commissioning activities ahead of startup.
Strong fundamentals in end-user markets were incentivizing shipments, with US Gulf Coast FOB export cargo values fluctuating during the week within an elevated range.
Amid the high prompt prices, buyers’ appetite for new long-term contracts to secure US LNG at more reasonable fixed rates has picked up.
The S&P Global Platts-assessed Gulf Coast Marker ended the week at $28.40/MMBtu on Dec. 7, up $2/MMBtu from the day before but down 20 cents/MMBtu from the high of the week at $28.60/MMBtu on Dec. 1. The GCM slid to its low of the week, at $26.30/MMBtu, on Dec. 3.
Total US feedgas demand hit almost 12.4 Bcf/d on Dec. 4, near a record, amid the surge in production from Sabine Pass Train 6 in Louisiana. Feedgas deliveries to Calcasieu Pass hit their highest level to date, at almost 51 MMcf/d, on Dec. 2. That level would need to be ramped up significantly before production could begin at what will be the seventh major US liquefaction facility in operation when that happens.
According to Venture Global, the Louisiana terminal was about 91% complete as of the end of October. All 18 liquefaction modules have been received from Italy and set on foundations, and the facility is undergoing commissioning work.
On Dec. 7, total US feedgas demand fell about 900 MMcf/d from the day before, to 11.2 Bcf/d, Platts Analytics data showed. The drop was partly due to a sharp decline in gas deliveries to Freeport LNG in Texas. Flows at the plant were expected to continue to fluctuate as routine train maintenance was occurring, a person familiar with the situation said.
Panama Canal congestion eased during the week, with the maximum wait on Dec. 7 for unreserved LNG tankers at two days northbound and seven days southbound, according to the Panama Canal Authority.
The persistent high market prices have triggered China’s rush for long-term LNG contracts with US exporters.
So far this year, at least eight Chinese companies, including state-owned national oil companies, have signed nearly a dozen long-term contracts with overseas suppliers, for a volume of nearly 25 million mt/year, more than half of which were signed in the September-November period when spot LNG prices hit record highs.
State-owned Sinopec, with its trading arm Unipec, and CNOOC signed the largest volume of long-term LNG in 2021 and scooped up more than half of the deals totaling over 15 million mt/year, mainly from US-based Venture Global and Qatar. Cheniere has also signed new offtake deals this year with the Chinese.