East Texas spot gas prices have continued to climb this week, despite planned maintenance work limiting flows to Cheniere Energy's Corpus Christi LNG export facility July 21-23, as Mexico absorbs additional supply.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Houston Ship Channel traded 12.50 cents higher at $3.875/MMBtu on July 21, according to preliminary settlement data, extending a rally that has seen prices rise 30 cents since the start of July to levels not seen since mid-February.
Other East Texas cash locations, such as Katy Hub and Agua Dulce, have risen in tandem with Houston Ship Channel.
The region's cash market gains have been largely impervious to a spell of below-average temperatures this July that have weighed down typical summer cooling demand. Texas domestic gas demand has averaged 11.37 Bcf/d so far this month, down 10% from the same time last year, according to S&P Global Platts Analytics data.
Robust export demand has compensated for Texas's recent lackluster domestic demand, with pipeline exports to Mexico and LNG feedgas demand both outpacing year-ago levels.
Having the optionality of both pipeline and LNG exports has helped insulate East Texas spot prices from fluctuations in one demand source.
On July 21, Cheniere began several days of planned maintenance on its Corpus Christi pipeline, which supplies feedgas to the company's East Texas gas liquefaction and export facility of the same name. Feedgas deliveries to Corpus Christi LNG dropped 700 MMcf, or 30%, to 1.65 Bcf on July 21.
The pipeline's Sinton Compressor Station is the focus of one of the maintenance projects, limiting flows past the compressor station by 510 MMcf on July 21. A second maintenance project on NGPL meter station further limited flows by 380 MMcf/d for July 21 through the morning of July 23.
The excess supply from lower LNG feedgas demand was mostly absorbed by higher exports to Mexico. Platts Analytics data shows that gas flows to Mexico from Texas increased around 330 MMcf, or 6%, to 6.04 Bcf on July 21.
Pipeline developers have brought additional infrastructure online in recent years that enable higher Texas-to-Mexico flows, including Valley Crossing and Sur de Texas-Tuxpan. The additional capacity has helped put 2021 on track to be the strongest year for Texas-to-Mexico gas flows on record, averaging 5.34 Bcf/d year-to-date.
East Texas's spot gas price rally is likely to continue in the near-term, forging a path toward $4/MMBtu gas and fresh multi-month highs.
The scheduled return of Corpus Christi feedgas demand to normal by July 23 is expected to coincide with higher temperatures, supporting an outlook for stronger overall gas demand and higher cash prices.
Platts Analytics and CustomWeather forecasts show the average daily Texas temperature steadily increasing over the next seven days, from 80 degrees Fahrenheit on July 21 to 87 F on July 27. National Weather Service forecasts also supports that view, with the high temperature in Houston forecast to rise to 97 F by July 25 from 90 F on July 21.