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New England winter natural gas prices top $40 as global LNG market tightens

Highlights

Prices surge at Algonquin city-gates, Iroquois Zone 2

TTF trades near $50 on strong European demand

New England imports 17.8 Bcf of LNG, winter 21-22

  • Author
  • J Robinson
  • Editor
  • Valarie Jackson
  • Commodity
  • LNG Natural Gas

Winter gas prices in New England are hitting record highs in recent trading as the import-reliant region prepares to compete for LNG cargoes in a global market under pressure from strong demand in Europe.

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At Boston's Algonquin Gas Transmission city-gates hub, peak-winter gas prices for the upcoming season have more than doubled since the start of this year. In recent trading, the December 2022 contract settled at a new high of over $34/MMBtu with the January 2023 contract now priced at a record high of over $40/MMBtu.

At Iroquois Gas Transmission Zone 2 in upstate New York—which typically prices up during winter to pull eastern Canadian gas into New England—the runup has been similar in magnitude with peak-season prices now trading in the $30-$40/MMBtu range, data from S&P Global Commodity Insights shows.

Record winter prices in New England's gas market come as the supply-constrained region looks to purchase LNG cargoes for the upcoming season. This winter, attracting cargoes in the Atlantic Basin market could prove more challenging as jittery buyers in Western Europe move aggressively to fill storage inventories ahead of next winter amid growing uncertainty over gas supply from Russia.

Onshore gas prices at Europe's benchmark TTF hub are now trading at close to $50/MMBtu. In the global LNG market, winter cargo prices are only slightly lower, trading at around $41-$42/MMBtu.

LNG imports

Historically, New England's gas market has faced exposure to global LNG prices during the peak winter heating season as the region relies on cargo imports to help overcome pipeline constraints and deliverability limitations that make it challenging for piped gas to reach end-users. The only difference this winter is that New England utilities and other customers will pay top dollar for supply.

Last winter, New England imported six LNG cargoes from November to March carrying the regasified equivalent of about 17.8 Bcf, Platts Analytics data shows.

During winter 2020-2021, the region's two import terminals—Everett LNG and Northeast Gateway—imported a similar quantity of about 17.3 Bcf over the same five-month period. But in just the past five years, New England at times has imported significantly more—upward of 30 Bcf during a single heating season.

This winter, Platts Analytics is expecting stronger demand from the residential-commercial sector in the US Northeast, potentially fueling another uptick in LNG imports to New England.

While the Northeast includes states beyond New England and as far south as Kentucky and Virginia, some of this season's expected uptick in demand would still likely come from the smaller, six-state sub-region stretching from Connecticut to Maine.

From November through March, homes and businesses in the Northeast are forecast to consume an average of 14.1 Bcf/d, or about 700 MMcf/d more than the residential-commercial sector did last winter. If accurate, it would make for the region's strongest heating-demand season on record since winter 2018-2019.