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Kinder Morgan's Elba Liquefaction receives highest gas deliveries since July 1

Highlights

10-unit Georgia facility has 2.5 million mt/year capacity

Chinese import strength helping spur US exports

Feedgas demand at Kinder Morgan's Elba Liquefaction terminal in Georgia reached its highest level in three weeks July 23, as strong international prices spur high utilization at US export terminals.

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The smallest of the six major US liquefaction facilities has yet to have all 10 of its trains operating at the same time, as one remains offline since a 2020 fire.

Persistent Chinese import strength, strong power-sector driven LNG demand in South Korea and flat Asian LNG supply year on year means that Asia's pull on Atlantic Basin supply is expected to grow nearly 100 million cu m/d through the balance of summer, S&P Global Platts Analytics estimates. Together with the strong pricing environment, that should continue to incentivize US export activity.

Gas deliveries to Elba, near Savannah, registered approximately 312 MMcf/d during the morning cycle July 23. That was the highest level since July 1, Platts Analytics data show.

Total US LNG feedgas demand was re-approaching 11 Bcf/d -- a level it last surpassed July 14 -- as Northeast Asian spot prices remained comfortably above $14/MMBtu.

Two major US exporters, Cheniere and Sempra, are preparing to release their second-quarter financial results, and their outlooks will be closely watched by the market. Kinder Morgan said in its recent earnings report that the strength in LNG feedgas demand was a key reason why total gas volumes on its pipelines rose quarter over quarter.

In May 2020, a fire occurred in a mixed refrigerant compressor of Elba's Unit 2. Two adjacent units that were shut down as a precaution were later brought back online, though Unit 2 has remained offline since then.

Earlier this year, Kinder Morgan said it may be able to restore service to Unit 2 in the fourth quarter.

Elba, with a capacity of 2.5 million mt/year, is supported by a 20-year contract with sole offtaker Shell. It shipped its first cargo in December 2019.

The terminal -- originally built to import LNG and later converted to handle exports after the US shale revolution -- utilizes Shell's Movable Modular Liquefaction System design. Kinder Morgan is the majority owner in a joint venture that holds the terminal, while investment funds managed by EIG Global Energy Partners have a 49% stake.