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Feedgas flows to Cove Point LNG export terminal drop as Florence bears down on coast

Highlights

Last loading from Maryland facility was September 7

Operator to maintain adequate staffing to keep facility in safe condition

Houston — LNG export activity at Dominion Energy's Cove Point terminal in Maryland appeared to be reduced to a crawl Thursday as Hurricane Florence generated heavy winds and rain along the US East Coast, S&P Global Platts Analytics data shows.

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Feedgas deliveries to Cove Point have fallen to just over 0.3 Bcf/d during the last three days, down roughly 60% from the prior month-to-date flows. As of midday, no tankers were loading at the terminal and there were no inbound LNG vessels in the vicinity of the facility, Platts cFlow ship tracking data shows. The last loading was on September 7 from the GasLog Santiago.

A container ship, the Rio Negro, was entering the Chesapeake Bay bound for Baltimore on Thursday morning, and there were at least seven coal vessels that appeared to be holding offshore. Cove Point site operations and maintenance staff would continue to keep the facility in a safe condition and maintain adequate staffing levels for all shifts, spokesman Karl Neddenien said in an email responding to questions. He declined to say whether the terminal would shut down temporarily due to the storm.

"Weather conditions and forecasts are being closely monitored and the main site and offshore platform areas are being inspected for potential wind-borne material," Neddenien said. "Storm water drains are being inspected to ensure they are clear and functional."

Dominion became the second US exporter of LNG produced from shale gas when it shipped its first cargo March 2 aboard the Shell-owned Gemmata tanker. To date, it has exported 29 cargoes, cFlow data shows.

The terminal's startup was an important moment for the Northeast US region, where a surge in gas production in recent years has transformed it from a predominantly domestic demand market to now becoming an active player, and supplier, in global markets. Cove Point is designed to produce up to 750 MMcf/d of LNG.

Cheniere Energy's Sabine Pass terminal in Louisiana exported its first cargo in February 2016. While a handful of other US export terminals are under construction and more than a dozen are being proposed, how dominant the US field will be in the years ahead is unclear as some second-wave projects have yet to reach firm long-term supply contracts with buyers.

MARKET WATCHING

Next week's Gastech conference in Spain will examine the current state of the global LNG market, including everything from pricing strategies to commercial efforts to support US export projects to the impact of escalating international trade disputes.

The dearth of positive final investment decisions for new US export projects over the last two years has increased the chances that demand will exceed supply in the early 2020s when the second wave of US projects is scheduled to start coming online.

Meanwhile, Florence weakened to a Category 2 hurricane on Thursday, with the expectation that it would make landfall along the coast of North Carolina and South Carolina early Friday.

As a result of the storm, Kinder Morgan said it would temporarily cease construction activities at its $2 billion LNG export terminal project at Elba Island near Savannah, Georgia. Kinder Morgan said in July that initial in-service was expected in the fourth quarter, with final units slated to come online by the third quarter of 2019.

-- Harry Weber and Ross Wyeno, newsdesk@spglobal.com

-- Edited by Gail Roberts, newsdesk@spglobal.com