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TPI Takeaway Market Snapshot for the week of November 28 2022

Natural Gas News:

Freeport LNG targets mid-December restart for Texas export plant.

U.S. liquefied natural gas (LNG) company Freeport LNG said it was targeting a mid-December restart for its Texas export plant, which has been shut for six months after a fire, pending regulatory approval.

Freeport, the second-biggest U.S. LNG export facility, closed in June after an explosion that energy consultants said resulted from human error, inadequate operating and testing procedures, and other factors.

DECEMBER RESTART

Many analysts said in recent weeks that they did not expect the plant to restart until December or later because the company had not yet submitted its restart plan to federal regulators.

The Freeport shutdown has forced customers to buy expensive LNG from other sources to supply their customers. 

In August, LNG prices hit record highs of more than $90 per million British thermal units (mmBtu) at the Dutch Title Transfer Facility (TTF) in Europe and nearly $70 at the Japan Korea Marker (JKM) in Asia.

That compares with an average of around $7 per mmBtu this year at the U.S. Henry Hub gas benchmark in Louisiana.

Since Freeport will not restart in November, a couple of LNG vessels heading for Freeport, such as LNG Rosenrot or had waited outside the plant, such as Prism Brilliance, have moved on to other ports.

National Weather Outlook:

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US Weather Map

Light national demand will open the new trading week as a mild system exits the East, but overall mild over most of the southern and eastern U.S. for the first part of the week.

A frosty weather system with snow will track into the West & Northern Plains today and tomorrow before traveling south and eastward the second half of the workweek with lows of -0s to 30s. Texas could see temperatures in the 20s, driving natural gas demand.

Next week, a warmer weather pattern is expected to return across most of the southern and eastern U.S., leading to light national demand.

Natural Gas Headlines

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EIA Natural Gas Storage Report
  • Last week, the natural gas prompt month continued its high volatility, trading in a range from $6.77-$7.31. Today is the last day for the December 2022 contract to trade, with the January 2023 contract rolling into the top position tomorrow.
  • Production increased to levels we saw at the end of October and is currently at 98.3 Bcf/d. That is about 1.5 Bcf/d more than we have seen for most of November. However, Canadian imports fell by almost 2.0 Bcf/d last week, so total supply remains relatively flat at around 103 Bcf/d. Demand dropped heavily last week for both power burn and res/comm.
  • They dropped by 7 and 13 Bcf/d, respectively. The drop in demand is mainly due to moderating weather across most of the country and lower demand due to the Thanksgiving holiday.
  • This dropped the total demand levels from the 120s to around 100 Bcf/d, which is in line with recent November averages. The United States is expected to see mixed weather for the upcoming week, with a slightly warmer East Coast, a Colder Pacific Northwest, and average temperatures for most other regions.