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February gas flows to US LNG plants fell amid facility tests, but will soon rise

Daily natural gas flows to the three operational U.S. LNG export plants continued to slide in February after falling the previous month, a drop-off that coincided with commissioning work at two Cheniere Energy Inc. gas liquefaction trains in Texas and Louisiana.

But those LNG production units, a fifth train at Sabine Pass and the first train at Corpus Christi, entered commercial service in early March, suggesting feedgas flows will ramp up both in that month and in the months ahead. That trend began to emerge in the final weeks of February.

Total average gas deliveries to the U.S. LNG facilities fell to about 3.53 Bcf/d in February, down from about 3.75 Bcf/d in January, and down from about 4.15 Bcf/d during December 2018, as shown by pipeline flow data from S&P Global Market Intelligence.

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For a second consecutive month, February flows to Cheniere's Sabine Pass LNG export facility in Louisiana accounted for most of the overall decline. But flows to Cheniere's Corpus Christi terminal in Texas picked back up during the month after dropping off in January.

On the single pipeline delivering gas to the Corpus Christi terminal, scheduled volumes totaled nearly 9.96 Bcf in February, up from nearly 9.17 Bcf in January, but still down from about 11.61 Bcf in December 2018. Average daily flows increased to nearly 0.36 Bcf/d in February from nearly 0.3 Bcf/d the previous month. Flows that had fallen off to nothing in mid-January began ramping back up at the end of the first week of February, hitting a high of nearly 0.78 Bcf/d on Feb. 22.

Total gas flows in February on the three pipelines to Sabine Pass were about 68.64 Bcf, down from more than 84.47 Bcf in January. That represented a greater monthly decline than the drop from 94.38 Bcf in December 2018.

The Federal Energy Regulatory Commission on March 12 authorized a request of Cheniere subsidiaries to bring the fifth train at Sabine Pass into commercial service. The approval came less than two weeks after FERC allowed the first train at Corpus Christi to start commercial service. Commissioning activity at the facilities had been underway for months. (FERC dockets CP13-552 and CP12-507)

On March 11, FERC approved a request from a Cheniere subsidiary to introduce feedgas to the second LNG train of its Corpus Christi terminal, a significant step toward bringing that facility online in the second half of 2019.

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At Sabine Pass and Dominion Energy Inc.'s Cove Point terminal in Maryland — the two major U.S. LNG plants that were in commercial service in February — the total average daily gas delivery was more than 3.17 Bcf/d in February, down from nearly 3.46 Bcf/d in January.

The combined total monthly scheduled gas transportation capacity for pipelines feeding the Corpus Christi, Sabine Pass and Cove Point terminals was about 98.78 Bcf in February, down from about 116.29 Bcf in January and 128.78 Bcf in December 2018.

Total average daily gas flows to all three terminals in February ramped up through the month, starting at about 3.26 Bcf/d. Flows fell as low as 1.15 Bcf/d on Feb. 6 but climbed as high as 4.7 Bcf/d on Feb. 25.

At Sabine Pass, average daily flows on two of the three operating pipelines to the terminal decreased significantly during February compared to the previous month, while average flows on a third were roughly flat. Daily average flow on the Natural Gas Pipeline Co. of America LLC line decreased about 25% from January to February, and the flow on the Transcontinental Gas Pipe Line Co. LLC line dropped about 11%. The daily average flow on Cheniere Creole Trail Pipeline LP increased by about 0.34% from month to month.

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Each of the trains at 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. Sabine Pass shipped the first LNG cargo from the Lower 48 in February 2016.

The first commercial deliveries from Cheniere's first train at Corpus Christi and fifth train at Sabine Pass are expected in June and August, respectively.

At Cove Point, the daily average flow on the pipeline to the terminal decreased by about 1% from January to February. Monthly scheduled capacity on the pipeline totaled about 20.19 Bcf in February, compared to about 22.65 Bcf in January. Cove Point shipped its first commissioning cargo of LNG in March 2018 and entered commercial service in April 2018. The single Cove Point train is capable of producing 5.25 mtpa of LNG, or roughly 0.8 Bcf/d.

Despite the overall decline of gas flows during train commissioning activity in the first months of 2019, feedgas volumes flowing into U.S. LNG export plants stand to increase significantly in 2019. As many as three new export terminals are coming online this year. Cheniere is also almost done on a second train at Corpus Christi. It received approval from FERC on March 11 to introduce feedgas as it commissions the facility that the company expects to bring online in the second half of 2019.

The U.S. is on track to more than double by the end of 2019 the LNG export capacity of 3.6 Bcf/d that the country reached when Cove Point came online.

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The Sempra Energy-led Cameron LNG export terminal in Louisiana could soon begin producing LNG. Project officials said in early February that the first train of the facility was 99% complete. Sempra has said it expects the first three trains of the terminal to start producing LNG in 2019. That $10 billion first phase of the project would be capable of producing 12 mtpa of LNG, or about 1.7 Bcf/d.

Another anticipated project is Kinder Morgan Inc.'s Elba Island LNG terminal in Georgia, which received approval March 6 from FERC to begin introducing feed gas to the facility, a significant milestone as the first train advances toward startup. Elba Island's 10 modular liquefaction units are expected to produce a total of 2.5 mtpa of LNG by the end of the year. (FERC docket CP14-103)

But regulatory filings by the Kinder Morgan subsidiaries developing the facility show the project is facing additional construction delays, with commissioning activities expected to stretch into the second quarter, beyond an anticipated in-service date near the end of March.

The first train at Freeport LNG is expected to come online in September, roughly a nine-month delay from a previous target. The second and third trains are slated to start up in January 2020 and May 2020. The approximately $13 billion venture will be able to produce 15.3 mtpa of LNG once all these trains are in service, and the developer is seeking approval for a fourth train that would add 5.1 mtpa of capacity.

Freeport LNG Development LP expects to begin flowing feedgas to the facility in April or May, with first LNG ready to load in July, CEO Michael Smith said in a March 11 interview with S&P Global Platts on the sidelines of the CERAWeek by IHS Markit conference.