TPI Market Snapshot header
market snapshot for Monday December 5 2022

Natural Gas:

Freeport LNG: Another production restart delay to year’s end

Freeport LNG on Friday again delayed the restart of the second-biggest U.S. liquefied natural gas (LNG) export facility, moving its forecast for resuming processing to year’s end, pending regulatory approval.

Freeport LNG shut the Texas plant on June 8 after an explosion and fire that energy consultants said resulted from inadequate operating and testing procedures, human error, and fatigue.

Last month, the closely-held company said it was on track to restart the plant in mid-December and would get most of its 15 million tonnes per annum production back by January with a return to full service in March.

NATURAL GAS STORAGE REPORT

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  • For the Week Ending 11/25/22, the working natural gas in storage for the lower 48 states was 3,483 bcf, representing a decrease of 81 bcf compared to last week’s report.
  • Also, the reported levels represent a decrease of 89 bcf compared to one year prior and a decline of 86 bcf compared to the five-year average.
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Averting the rail strike has led to a drop of almost $1.00 in the last few days. Take advantage of this drop with your clients who are on the fence, as the next cold front that increases demand by any significant amount will lead to a price increase.

  • January pricing is the highest month on the calendar right now, with only January and February currently over $6.00. It is not a good idea to wait until spring, however. A cool spring will see pricing jump up like last spring.
  • Pricing is also being helped by good storage reports over the last month, bringing our deficit from the five-year average down to 2.4% and 2.5% from last year.

Weather: US Weather Outlook

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  • Warmer than average high pressure will rule the southern and eastern U.S. with highs of the upper 40s-60s across the Ohio Valley and Northeast and 60s to lower 80s across the southern U.S. and Mid-Atlantic Coast for weak demand.
  • Frigid air will cover the Rockies and N. Plains with highs of zero to 30 degrees and lows of -10s to 20s for regionally strong demand. The West will be mild to cool and unsettled with rain and snow showers with highs of 30 degrees to 50 degrees.

RAIL STRIKE SETTLEMENT HELPS LOWER THE GAS MARKET

40% of freight moves by rail, including almost 4,000,000 carloads of coal. Without that coal option, natural gas sees higher demand and higher pricing. A note. Right now, there is virtually zero LNG rail freight.

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Above view on freight train wagons with coal
  • A rail strike would halt the shipment of 40% of America’s goods.
  • A strike would also increase the price of gasoline Natural Gas.
  • 62,000 bbls/day shipped by rail
  • Almost 4,000,000 carloads of coal ships by rail. Without this coal, the demand for Natural Gas and the cost increase.
  • The House and Senate passed a bill that would enforce a contract that many of the railroad unions did not approve, but Congress could force this contract on the unions via the Railroad Labor Act of 1926. The bill would make a strike by railroad unions illegal.
  • The House also passed a bill that would include seven days of sick leave per year (they currently get one or none) but failed to get 60 votes in the Senate.
  • The passage and signing of the bill helped drop the Natural Gas market by almost $0.90 since Thursday.