US LNG export utilization rises from recent lows as maintenance weighs on feedgas demand

Total US LNG feedgas deliveries were on track to reach 11.2 Bcf/d June 16 as flows rebounded from a six-month low, but scheduled maintenance activities at US export facilities continue to weigh on overall terminal utilization amid rising market demand for US LNG cargo.

The drop in June feedgas deliveries, which so far has averaged about 1.5 Bcf/d below the nearly 13 Bcf/d average in May, has been driven mainly by major maintenance activity planned at Cheniere's Sabine Pass LNG terminal as part of a six-year maintenance cycle at the facility.

An apparent operational issue at the Freeport LNG plant in Texas further depressed overall feedgas deliveries in recent days to reach as low as about 10.1 Bcf/d June 14.

As US export terminal utilization has continued to wane, the Gulf Coast LNG market has strengthened amid concerns over capacity outages in Europe, where multiple gas fields in Norway encountered both planned and unplanned maintenance.

Alongside that, Norway's Nyhamna gas processing plant announced it was extended its maintenance to July 15, which led to the initial gains seen in Atlantic LNG markets. The Dutch government also announced this week it may shut down the Groningen gas field in October—a decision will be announced by the end of June.

The Platts Gulf Coast Marker for US FOB cargo loading 30-60 days reached a two-month high June 15 as the global LNG complex strengthened.

Platts, which is part of S&P Global Commodity Insights, assessed the market at $11/MMBtu June 15, the highest it has been since April 12, when it was assessed at $11.06/MMBtu. The same market was assessed at $8.758/MMBtu June 16.

Sabine Pass

Spring maintenance at US LNG terminals tends to be clustered around May and June. And US gas market analysts are looking for a rebound in US LNG feedgas demand as one factor that could help tighten US supply-demand fundamentals in the weeks ahead, along with summer power burn demand.

Cheniere confirmed June 16 that planned maintenance activities remained underway at Sabine Pass but declined to comment further about its maintenance plans, including the expected duration of the maintenance activities. Feedgas flows to Sabine Pass have averaged nearly 3 Bcf/d so far this month as of June 16, down from an average of 4.6 Bcf/d in May.

The company had previously described the six-year maintenance activities as entailing "two trains coming down basically at the same time." Sabine Pass has six liquefaction trains, each with an LNG production capacity of about 5 million mt/year.

Cheniere had also posted notices of planned compressor maintenance in June on the Creole Trail pipeline feeding Sabine Pass coinciding with the plant maintenance. Maintenance on the Gillis compressor station feeding the terminal was completed June 15, the company said in a notice.

Freeport

Freeport declined to comment about a recent drop in utilization at its facility. But notices posted by Boardwalk Pipeline Partners for its Gulf South pipeline feeding the Freeport facility starting June 14 said that the operator had failed to take confirmed quantities of gas.

Flows to Freeport fell to about 700 MMcf/d June 14 from more than 2 Bcf/d June 12. It then climbed back to nearly 1.9 Bcf/d June 14, S&P Global data showed. Freeport was scheduled to receive about 1.8 Bcf/d June 16, based on nominations for the morning cycle that could later be revised.

An LNG tanker, the Yiannis, departed laden from the Freeport LNG terminal June 16, and another tanker, the Grazyna Gesicka, was moored at the facility after arriving the same day, S&P Global data showed.