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July gas flows rose at US LNG plants as Cameron LNG went through preflight

Daily natural gas flows feeding U.S. LNG export plants continued to climb in July as federal regulators cleared the country's fourth major terminal to begin shipping commercial cargoes to world markets.

That terminal — Cameron LNG in Louisiana is expected to enter commercial service in mid-August. The schedule came from executives of majority owner Sempra Energy on Aug. 2, about a week after the project received authorization for service from the Federal Energy Regulatory Commission. But Cameron has already exported "a number of cargoes" since the first commissioning cargo left the facility in late May, according to lead construction contractor McDermott International Inc.

Signs of that activity were evident in July feedgas flows that rose and fell during the final tests of the facility. Average gas deliveries to Cameron LNG during the month were nearly 410 MMcf/d, peaking at more than 706 MMcf/d on July 2 and bottoming out in the final eight days of the month with no detectable deliveries. That sort of fluctuation, showed by pipeline flow data from S&P Global Market Intelligence, was consistent with the final stages of testing before commercial activities begin.

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Total average gas deliveries in July to Cameron LNG, Dominion Energy Inc.'s Cove Point LNG terminal in Maryland and Cheniere Energy Inc.'s export terminals in Louisiana and Texas were about 5.07 Bcf/d, an increase from nearly 4.73 Bcf/d the month prior. Even without Cameron, flows to the other three terminals, which are in commercial service, reached an all-time high of about 4.66 Bcf/d, a month after setting the previous record of about 4.52 Bcf/d.

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The July flows were also notable because they overlapped with Hurricane Barry, the first storm of the season. Flow data revealed the muted impact of the hurricane across all U.S. LNG terminals, but a mid-month drop in feedgas volumes to two of the facilities corresponded with the storm's arrival. At the lowest daily point during July, total flows into Sabine Pass slipped to about 2.09 Bcf, compared to a monthly average of 2.75 Bcf/d. That low-point came on July 11, two days before Hurricane Barry made landfall on the Louisiana coast. Flows to Cameron LNG, the other facility close to the line of the storm, also dipped briefly, reaching about 258 MMcf on July 11 before bouncing back.

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As a buildout of U.S. LNG infrastructure continues along the U.S. Gulf Coast, market observers have pointed to increased potential for impacts to feedgas demand as a result of extreme weather. And even though overall drops in volumes were small at Sabine Pass LNG and Cameron LNG around the time of Hurricane Barry, they represented significant portions of deliveries to the terminals. Total flows to Sabine Pass were down almost 26% on July 11 from the levels just two days prior. At Cameron LNG, the drop off was nearly 56% in the same period.

"While Hurricane Barry tracked far to the east of Sabine and Cameron LNG, the impacts are already evident that storm activity in the Gulf could have significant impact on feedgas demand at the facilities going forward," BTU Analytics LLC Managing Director Tony Scott said in a report after the storm.

Less than 100 miles separate Sabine Pass, Cameron LNG and the Freeport LNG Development LP terminal in Texas that is expected to soon begin shipping commissioning cargoes, Scott observed. "As Wave 2 facilities gain steam, the concentration of facilities in a small corridor could add [significant] volatility to demand in the years ahead," he said.

As it stands, U.S. LNG exports are expected to keep growing as more facilities come online.

July flows on the line feeding Cheniere's Corpus Christi LNG terminal jumped nearly 36% from the previous month as the second gas liquefaction train entered the final stage of testing before the start of commercial activities, targeted for this year. The second train, which started producing LNG on June 13, shipped the first cargo on July 1. Each of the seven trains in operation between Cheniere's two terminals has the capacity to produce 4.5 million tonnes per annum of LNG, or about 0.7 Bcf/d of gas.

The single train at Cove Point is capable of producing 5.25 mtpa of LNG, or roughly 0.8 Bcf/d.

Cameron LNG is expected to be able to export 12 mtpa of LNG, or about 1.7 Bcf/d, when all three trains are online in 2020.

Kinder Morgan Inc.'s Elba Island terminal is expected to begin exports of commissioning cargoes soon after a series of delays.

But a short-term decline in feedgas flows was expected for much of August. That is because Cheniere took trains 3 and 4 at Sabine Pass offline for scheduled maintenance work, with flows falling sharply in early August, S&P Global Platts reported Aug. 5. A Cheniere spokesperson said the turnarounds were expected to last about as long as maintenance work on trains 1 and 2 that ended in early April, or about three weeks, Platts reported.

S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.