Strong market fundamentals drive US gas liquefaction surge into the new year

Houston — High capacity utilization continued Thursday at US LNG export terminals, with feedgas deliveries near record levels, amid robust winter demand and strong market fundamentals in Asia and Europe, S&P Global Platts Analytics data showed.

The activity comes as the first cargo shipped from Kinder Morgan's Elba facility in Georgia approached its destination in Pakistan.

A combination of positive netbacks throughout November and December, coupled with multiple facilities ramping up commissioning activities ahead of their expected commercial in-service dates, has incentivized strong dispatch of US LNG in the front months.

In addition, as Cameron LNG in Louisiana, Freeport LNG in Texas and Elba have brought more units online, total LNG feedgas deliveries in December averaged 115% of total export capacity that was in commercial service. On Thursday, feedgas deliveries to the six major US liquefaction terminals averaged about 8.6 Bcf/d, just short of the record 8.7 Bcf/d set on December 31, Platts Analytics data showed.

Meanwhile, the Greek-owned Maran Gas Lindos tanker, which departed Elba on December 13 with the facility's first export cargo, was about 250 nautical miles south of the coast of Pakistan on Thursday afternoon, according to cFlow, Platts trade flow software. The vessel was scheduled to unload there, according to sources. Port Qasim in Karachi is served by floating storage and regasification units (FSRUs) owned by Excelerate Energy and BW Group.

Backed by a 20-year offtake agreement with Shell, Elba will have a capacity of 2.5 million mt/year when all 10 trains planned for the facility are completed in the first half of this year. Besides Elba, Cameron and Freeport, the other major US LNG export facilities are Sabine Pass in Louisiana, Corpus Christi in Texas and Cove Point in Maryland.

A recent Platts Analytics outlook projected the surge in new global LNG supply will finally come to an end by the middle of 2020, with capacity growth this year expected to be the slowest in five years. New supplies coming mainly from the US will still test the market's ability to consume it and sufficient demand growth will largely depend on lower prices.

-- Harry Weber, Harry.Weber@spglobal.com

-- Jack Winters, jack.winters@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com