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LNG tanker queues develop on USGC as exporters ramp up production

Houston — LNG tanker queues have begun to form on the US Gulf Coast this week, as three of the US' major export facilities began ramping up production on improved export economics.

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A total of seven tankers are in holding patterns just off the US Gulf Coast, with another two currently loading, data from S&P Global Platts Analytics showed Sept. 17.

Four of the tankers were queuing just off Port Arthur, where the US' largest export facility Sabine Pass is located. Another two tankers were in a holding pattern just offshore of Freeport LNG, while one other tanker, the LNG Juno, has been lingering on the USGC for more than two weeks with no clear implied destination.

Another three tankers were shown in transit to the USGC.

The uptick in tanker activity coincides with a sharp ramp-up in feedgas utilization among USGC-based exporters since the start of September, despite Cameron LNG being out of action due to damage to electricity infrastructure caused be Hurricane Laura.

Feedgas uptake on the USGC has increased by almost 60% from pre-Hurricane Laura levels, when both Sabine Pass LNG and Cameron LNG were taken offline as a safety precaution.

Total US feedgas demand was nominated at 7.442 Bcf on Sept. 17, with the three active Gulf Coast facilities accounting for the lion's share of that capacity, or 6.536 Bcf, data from Platts Analytics showed.

Tanker loading rates at USGC facilities have commensurately begun to increase as well, contributing to some of the vessel backlog currently being observed.

The average rate of tanker loadings so far for September has been the highest seen since May, with a noticeable uptick since Sept. 12. The seven-day average loading rate stood at 5.214 Bcf/day at the time of writing, well above the less than 1 Bcf/d seen at the start of the month.

The strong uptick in volumes can be attributed to the continued improvement of US spot export economics. The value of spot USGC-origin cargoes has been increasingly steadily at the same time that the cost of domestic gas in the US has been decreasing.

The spread between the Platts Gulf Coast Marker and the equivalent NYMEX Henry Hub futures contract crossed over from negative territory in early August. It strengthened to a 2020 high on Sept. 17. On that day, the GCM was assessed at $3.60/MMBtu, more than $1.30 above the equivalent HH futures contract.