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US LNG feedgas demand sets another record as total approaches 12 Bcf/d

Highlights

Lower Asia Pacific shipping costs a bullish sign

Seventh export terminal could start up year early

Houston — US LNG feegas demand hit a new record March 19 as total deliveries approach 12 Bcf/d, S&P Global Platts Analytics data show.

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Capacity could rise come fall when Venture Global LNG's Calcasieu Pass terminal in Louisiana – the seventh major US liquefaction facility – may be ready to ship its first cargo.

Platts Analytics expects full dispatch economics out of the US to continue in the months ahead, due in part to supportive summer prices on the back of a tighter than expected winter, with greater room available in European storage for injections. Shipping costs are significantly cheaper than the start of the year, outweighing short-term swings in prices and demand.

The 11.8 Bcf/d in total gas deliveries to existing US LNG export terminals topped the previous record of 11.65 Bcf/d set during the morning cycle March 17. Cheniere Energy's two terminals – Sabine Pass in Louisiana and Corpus Christi Liquefaction in Texas – account for more than half of the total demand.

The Platts JKM for May was assessed 14.4 cents/MMBtu lower at $6.550/MMBtu on March 19. JKM is the benchmark for spot-traded deliveries of LNG to Northeast Asia.

While prices were lower day-on-day, netbacks remain high enough to incentivize robust shipments from the US.

Asia Pacific freight was assessed at $30,000/day on March 18, compared with $45,000/day a month ago, and $165,000/day two months back, according to Platts data.

Venture Global recently said in a US regulatory filing that it could ship its first cargo in late 2021, a year ahead of schedule. It also said the 23.4-mile TransCameron pipeline, which will connect to interstate pipelines and allow feedgas to reach the terminal, will begin service "very soon."

The developments would be bullish for US LNG feedgas demand.

Venture Global provided the update in a filing to the Federal Energy Regulatory Commission requesting a waiver of certain rules on buy and sell transactions that would conceivably allow it to market upstream gas producers' output directly to foreign buyers. Cheniere secured such agreements with two shale producers.