24
Apr

Thursday Night Gas Storage Review + LNG Capacity Comments

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Commodity Watch:

  • EIA reported a somewhat smaller than anticipated storage injection of 24 Bcf (the Street was looking for 30 and I had a range of 25 to 35 Bcf).
  • Natural gas rallied briefly, failed to penetrate $11 and then took a cue from strength in the dollar which was battering oil and closed essentially flat at $10.79 on the day.
  • If the original forecast for this week holds as of next Monday morning, look for a slightly larger than average injection next week ( around 70 Bcf, vs last year's 67 Bcf and the five year average injection of 52 Bcf).
  • Independence Hub still down: (EPD) gave a repair calendar of 1 to 4 weeks back on April 9 so we're about half way through the time frame proposed until another 1 Bcfgpd hits the market.

gas-table-041808.jpg

 

gas-graph-1-041808.jpg

 

gas-graph-041808.jpg

Year End 2007 Send Out (Regassification) Capacity: 3.3 Bcfgpd (combined capacity of 4 facilities).

  • Freeport LNG terminal in Texas commissioned this week (third week of April): 1.55 Bcfgpd (1.75 peaking capacity). The owner says this new facility is fully contracted long-term. A second phase is planned with sendout capacity of 1.15 Bcfgpd but no completion date has been set.
  • Sabine Pass LNG terminal in Louisiana commissioned this week (also third week of April): 2.6 Bcfgpd (phase I).   Phase II is on schedule to open in 2Q09 with capacity of 1.4 Bcfgpd.

  • The Costa Azul LNG terminal in Baja California should be commissioned later in April, adding capacity of 1 Bcfgpd.

  • The Northeast Gateway LNG project in Massachusetts should be commissioned in May.  Adds 0.5 Bcfgpd (0.8 Bcfgpd peak capacity).

  • The Canaport LNG terminal in New Brunswick should come online by year end: 1 Bcfgpd capacity.

Implied Year End 2008 U.S. LNG Capacity: 3.3  + 6.65 Bcfgpd of baseload capacity additions = 9.95 Bcfgpd.  So by year end U.S. regas capacity will triple. But high prices in foreign markets continue to keep volumes away from U.S. shores. At $10 to $11 U.S. gas prices are not even remotely attractive relative to the $12 to 15 gas prices in South Korea and Japan.

 

2 Responses to “Thursday Night Gas Storage Review + LNG Capacity Comments”

  1. 1
    occam Says:

    It is worth pointing out that the 5 year NG storage average includes one year that was exceptionally low in April (2004), and that that year drops off at the end of 2008.

  2. 2
    zman Says:

    Reason and logic not exactly at the heart of the matter at this point. I think the best shot at demonstrating supply overhang will be rapidly rising injections but weather and independence hub are still masking it. By the end of the week after next, the big producers should have reported and then the brokerage firms will come out with their top 20, top 50 and in some cases top 100 gas producers and that will demonstrate strong YoY growth through 1Q-end. And producers continue to bump production growth estimates… it’s going to have to be a long hot summer with lots of nuke and coal outages to prevent a rapid storage rebuild.

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