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LNG market awaits word on when two of biggest US terminals to resume output

Highlights

Sabine Pass, Cameron LNG shut ahead of Hurricane Laura

Officials waiting for safe access to assess any damage

Houston — The operators of two of the biggest US LNG export facilities were waiting for site access to assess whether they suffered any wind or flood damage from Hurricane Laura's devastating blow to southwest Louisiana to determine when they can resume production, officials said Aug. 27.

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Cheniere Energy's Sabine Pass in Cameron Parish shut down Aug. 25, while Sempra Energy's Cameron LNG south of Lake Charles temporarily ceased operations Aug. 26. Together, they have the capacity to produce over 40 million mt/year of LNG from eight liquefaction trains.

With both terminals offline as Laura roared ashore early Aug. 27 packing winds up to 150 mph, total gas deliveries to the six major US LNG export terminals fell to about 2.1 Bcf/d, the lowest level since Feb. 6, 2019, even as flows to Cheniere's terminal near Corpus Christi, Texas, which wasn't affected by the storm, were up compared with days earlier, S&P Global Platts Analytics data showed. North Asian spot LNG prices advanced amid the supply disruptions.

Pilot services to vessels through the channels serving Sabine Pass and Cameron LNG remained suspended Aug. 27. No tankers were in the vicinity of either terminal, according to Platts vessel-tracking software cFlow.

"We'll know more in the coming days," Cheniere spokeswoman Jenna Palfrey said in an e-mail responding to questions. "First and foremost, we are focused on the safety and wellbeing of our employees, their families, and the community at large. As for our Sabine Pass facility, we will conduct an assessment of the site as soon as it is safe."

At Cameron LNG, spokeswoman Anya McInnis said that while it appeared the storm surge was less than projected, the operator would need to wait until local authorities deemed it was safe before officials could access the site to determine what if any damage occurred to the facility.The Hackberry, Louisiana, facility decided to evacuate all employees late Aug 26, after earlier in the day saying a small group of essential staff would remain behind in case of an emergency.

In Texas, Freeport LNG, south of Houston, operated through the storm. The Houston area averted the significant impacts that had been forecast in the days before the storm hit.

US liquefaction supplies were already well below record levels set early in the year, due to low international prices and weak demand exacerbated by the coronavirus pandemic. The market conditions led to a wave of US cargo cancellations that started in April and will last at least through October. Prior to the virus impacts on demand, Cheniere was the biggest individual physical buyer of natural gas in the US.

Price recovery

Prices for deliveries into the key Asian import market had recovered recently, and were more bullish amid tighter US supplies due to the shutdowns at Sabine Pass and Cameron LNG. The Platts JKM for October was assessed up by 15 cents/MMBtu day on day at $4.058/MMBtu on Aug. 27, on a competitive bid during the Platts Market on Close assessment process.

Market observers expected it would be days before the two US export plants could resume production as long as they did not suffer major damage. There was some uncertainty about how long efforts to inspect the plants and bring them back online may be delayed by damage to surrounding infrastructure such as roadways cluttered with debris.

"Everyone will just be looking at those two plants waiting for Cameron and Cheniere to give some indication of how soon they will come back up," Jason Feer, head of business intelligence at Poten & Partners, said in an interview. "And if they come back up in a few days or a week, then you would expect almost no impact on the market."