Natural gas demand in the U.S. fell sharply absent frigid temperatures during the week ended Jan. 18, as supply remained flat, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update" released Jan. 19.
Total U.S gas consumption tumbled 22% week over week, from 104.2 Bcf/d to 80.9 Bcf/d. "The weather early last report period was extremely cold because of polar vortex conditions, resulting in overall higher demand last period compared to this period," the EIA said.
Power burn similarly notched a 22% drop versus the week-ago level as it slid from 27.3 Bcf/d to 21.2 Bcf/d, while industrial-sector demand logged a 7% slump week on week as it faltered from 24.3 Bcf/d to 22.5 Bcf/d, and residential/commercial-sector consumption posted a 29% decline over the same period as it deflated from 52.7 Bcf/d to 37.1 Bcf/d. Exports to Mexico were down 4% on the week, from 4.0 Bcf/d to 3.8 Bcf/d.
Natural gas pipeline flows to the Sabine Pass liquefaction terminal during the week in review averaged 1.9 Bcf/d, or 14% higher than in the week prior. Two vessels with a combined LNG-carrying capacity of 7.6 Bcf left the terminal in the previous week, while one vessel with an LNG-carrying capacity of 3.8 Bcf was loading at the terminal as of the report's writing, EIA data showed. Pipeline deliveries reached 2.05 Bcf/d on Jan. 18, setting a new record and indicating the start of the commissioning of Train 3.
Meanwhile, overall U.S. natural gas supply remained constant relative to the week-ago level as it averaged at 77.4 Bcf/d. Dry production logged a 1% uptick week on week as it grew from 70.2 Bcf/d to 70.8 Bcf/d, while net imports from Canada notched a 3% decrease over the same period as it tightened from 6.5 Bcf/d to 6.3 Bcf/d.
In terms of inventories, the latest storage data from the EIA outlined a net 243-Bcf draw from stocks for the week to Jan. 13 that left total working gas in storage at 2,917 Bcf, or 431 Bcf below the year-ago level and 77 Bcf below the five-year average of 2,994 Bcf. It compared against a 175-Bcf withdrawal in the same week in 2016 and the 170-Bcf five-year average drawdown.
The reported inventory draw marks the third time weekly net withdrawals have surpassed the 200-Bcf mark during the 2016/2017 heating season. Cold weather, increased capacity for natural gas-fired electric generation, diminished natural gas production relative to the prior year and greater natural gas export volumes are seen to have combined to allow for the impressive storage pull.
Storage decline is occurring at a faster pace thus far in the 2016/2017 heating season than in the previous years, the EIA said. From Nov. 8, 2016, to Jan. 13, net storage withdrawals totaled 1,117 Bcf, making it the second largest over the comparable period since 2010, when the five-region weekly working gas history started. Only the 2013/2014 heating season that was characterized by extreme cold due to a polar vortex saw a larger withdrawal of 1,350 Bcf over the same period. The five-year average drawdown for this period is 882 Bcf.
Sabine Pass exports remain robust
U.S. LNG exports from the Sabine Pass terminal set a new record in December 2016, with 12 exported cargoes totaling an estimated 42.8 Bcf, of which eight cargoes were shipped to Asia, the EIA said. The previous record was reached in November 2016, when 10 cargoes equivalent to 33.6 Bcf were exported from the terminal.
South America was the main destination of U.S. LNG exports, accounting for 48% of the total during the first nine months of the terminal's operation, but rising spot LNG prices in Asia have begun to boost U.S. LNG exports to the region. In December 2016, cold winter temperatures in Asia drove up residential heating demand, and rising spot LNG prices in the region led to larger price spreads between the Atlantic and Pacific basins, thereby providing greater incentive for exports from the U.S.
Sabine Pass is the first LNG export facility in the contiguous U.S. It began exporting LNG in February 2016, but exports recorded in December 2016 are already at or near the maximum capacity that can currently be produced, the EIA said.
Exports from Sabine Pass remain high in January, with eight cargoes already exported and several more vessels now on the way to the terminal. Feedstock gas deliveries to the terminal has averaged 1.7 Bcf/d to date, setting a new record and indicating the start of commissioning of Train 3 as this volume already exceeds the 1.4-Bcf/d maximum combined nameplate capacity of Trains 1 and 2.
The terminal's operator, Cheniere Energy Inc., said Train 3 is expected to begin exporting LNG in April this year and to reach substantial completion by June, while Train 4 is expected to reach substantial completion in August.