Sabine Pass LNG terminal feedgas deliveries drop amid fog, maintenance

Houston — Feedgas deliveries to Cheniere Energy's Sabine Pass LNG export terminal dropped Monday by about 800 MMcf/d compared with last week's average, a dip after what has recently been record utilization at the biggest US liquefaction facility, S&P Global Platts Analytics data show.

The reduction in gas deliveries to the Louisiana facility was due to fog, and maintenance that was being conducted there, according to a person familiar with its operations.

The fog, which was expected to last through Wednesday, caused the temporary suspension of pilot service along the intracoastal waterway that serves Sabine Pass, according to a shipping notice to vessel operators in the area. At the time of the pilot service suspension, there were seven vessels waiting to enter the waterway and five vessels waiting to sail, the notice said.

As far as the work at the terminal, it was not clear which of the five trains was undergoing maintenance, nor how long the maintenance would last. In January, the facility's general manager said a "lighter load" of maintenance was expected at Sabine Pass in 2020 compared with 2019, when scheduled turnarounds were conducted on all five trains and officials took take a deep look inside some of the major equipment.

US Gulf Coast LNG netbacks from the Platts JKM, the benchmark price for spot traded LNG in Northeast Asia, fell to a record low of negative 68 cents/MMBtu as falling Chinese demand has sent Asian LNG markets into a tailspin. Both the prompt European and Asian LNG netbacks are now trading in negative territory, but the two- and three-month ahead contracts are still indicating a marginally positive spread for shipments to Europe, which could keep utilization at US LNG export terminals elevated in the near term.

Gas deliveries to Sabine Pass totaled 3.4 Bcf on Monday, compared with an average of 4.2 Bcf/d last week, Platts Analytics data show. Across the six major US liquefaction facilities, feedgas deliveries totaled about 8.1 Bcf on Monday, versus an average of 9.1 Bcf/d last week.

While weak prices and lower-than-expected demand in Asia have weighed on the global LNG market, and the recent coronavirus outbreak has exacerbated those challenges, existing US exporters have kept up their utilization levels. Cheniere has been especially aggressive. In January, it shipped its 1,000^th cargo from its two LNG terminals. Besides Sabine Pass, it operates an export facility near Corpus Christi, Texas.

Cheniere is building a sixth train at Sabine Pass and is developing a midscale expansion project at the facility in Texas.

ADDITIONAL LIQUEFACTION

Cheniere previously said it expected to make a positive final investment decision on the midscale expansion during the first half of this year. To market supply tied to the expansion, Cheniere has signed agreements with EOG Resources and Apache that will allow the upstream producers to access a global price by selling their produced gas to world markets via LNG that would be produced at the Texas facility.

Besides Cheniere's two facilities, there are four other major liquefaction terminals in operation in the US. Two more LNG terminals are currently being built -- Venture Global's Calcasieu Pass in Louisiana and ExxonMobil- and Qatar Petroleum-backed Golden Pass in Texas.

In the queue are another dozen or so developers that are actively pursuing new LNG export projects that, if built, would start up around the middle part of this decade. Four of those proposed projects – Texas LNG, Exelon-backed Annova LNG, NextDecade's Rio Grande LNG and the Cheniere midscale expansion – received Department of Energy authorization Monday to export cargoes to countries with which the US does not have a free-trade agreement.