US LNG feedgas deliveries drop to lowest level since October 2019: Platts Analytics data

Houston — Natural gas deliveries to the six major US LNG export terminals fell Tuesday to their lowest level in seven months as weaker global demand due to the coronavirus pandemic and seasonal factors weigh on the market, S&P Global Platts Analytics data show.

Heading into the summer, the current environment is expected to persist as cancellations increase, pressuring utilization.

Existing exporters have cautioned they may need to make adjustments to their operations to account for the dropoff in demand, while some developers of new liquefaction facilities have delayed final investment decisions to 2021.

Total US LNG feedgas deliveries fell to about 6.6 Bcf/d Tuesday, the lowest level since October 17, 2019, Platts Analytics data show.

The latest decline was largely due to a sharp drop in deliveries to Cheniere Energy's Sabine Pass terminal in Louisiana, where flows fell 800 MMcf/d day on day. Overall, deliveries to Sabine Pass and Cheniere's export terminal near Corpus Christi, Texas, were down a combined 1.1 Bcf/d month on month Tuesday.

Counter-balancing the drop from Cheniere was a roughly 400 MMcf/d rise in feedgas deliveries to Freeport LNG in Texas and Sempra Energy's Cameron LNG in Texas. Both of those facilities are in the process of ramping up production of their third trains. Flows to Dominion Energy's Cove Point terminal in Maryland were steady Tuesday, as were flows to Kinder Morgan's Elba Liquefaction in Georgia, by far the smallest of the six terminals.

Two Cheniere cargoes were canceled for April loading, one from each of its terminals. An unspecified number of additional cancellations have been received since then, according to Cheniere. Across all US terminals, upwards of 20-30 cargoes have already been canceled for loading through June.

Earlier in May, France's Total said it was planning to cancel some US LNG cargoes over the course of the summer and does not expect to expand its North American LNG business in the near term beyond its current commitments, given weak prices and demand due to the global economic slowdown.

Total has offtake contracts for some 3.2 million mt/year of LNG from Sabine Pass and Cameron LNG. Total also controls over 2.2 million mt/year of LNG to be produced by the third train at Freeport LNG. It inherited that commitment when it acquired Toshiba's US LNG business in 2019, before the pandemic hit. Total expects to defer some cargoes in the second and third quarters, although it did not say how many and from which US terminals.

Given extremely weak forward market prices, Platts Analytics expects US LNG production will remain significantly constrained through the end of the summer.

Historically, May is a lower demand period when LNG facilities tend to carry out seasonal maintenance. A Cheniere spokesman declined to say Tuesday if scheduled maintenance was occurring at either of the company's terminals, or explain what was driving the lower utilization.