Maintenance of LNG export facilities fails to hamper East Texas gas rally
Corpus Christi LNG feed gas demand down 30% on July 21
Pipeline exports to Mexico up 300 million cubic feet per day
Short term outlook for stronger demand, higher prices
Spot gas prices in east Texas continued to rise this week, despite scheduled maintenance limiting flows to Cheniere Energy’s Corpus Christi LNG export facility from July 21 to 23, so that Mexico absorbs additional supply.
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Houston Ship Channel traded 12.50 cents higher at $ 3.875 / MMBtu on July 21, according to preliminary settlement data, extending a rally that has seen prices rise 30 cents since early July to levels not seen since. mid-February.
Other East Texas credit unions, such as Katy Hub and Agua Dulce, have grown in tandem with the Houston Ship Channel.
Gains in the region’s spot market were largely insensitive to a period of below-average temperatures in July that weighed on typical summer cooling demand. According to data from S&P Global Platts Analytics, domestic gas demand in Texas averaged 11.37 billion cubic feet per day this month, down 10% from the same time period. last year.
Strong export demand offset recent lackluster domestic demand from Texas, pipeline exports to Mexico and demand for LNG feed gas surpassing year-ago levels.
The ability to export both pipelines and LNG has insulated East Texas spot prices from fluctuations in a source of demand.
On July 21, Cheniere began several days of scheduled maintenance on its Corpus Christi pipeline, which supplies feed gas to the east Texas gas export and liquefaction facility of the same name. Feed gas deliveries to Corpus Christi LNG fell 700 million cubic feet, or 30%, to 1.65 billion cubic feet on July 21.
The pipeline’s Sinton compressor station is at the center of one of the maintenance projects, limiting flows beyond the compressor station to 510 MMcf on July 21. A second maintenance project on the NGPL metering station further limited flows to 380 MMcf / d from July 21 until the morning. July 23.
The excess supply resulting from lower demand for LNG feed gas was mainly absorbed by increased exports to Mexico. Platts Analytics data shows gas flows to Mexico from Texas increased by about 330 million cubic feet, or 6%, to 6.04 billion cubic feet on July 21.
Pipeline developers have brought additional infrastructure online in recent years that allows higher flows from Texas to Mexico, including Valley Crossing and Texas-Tuxpan’s Sur. The additional capacity helped make 2021 the strongest year on record for gas flows between Texas and Mexico, averaging 5.34 Bcf / d year-to-date.
The rise in spot gas prices in East Texas is expected to continue in the near term, paving the way for $ 4 / MMBtu of gas and new multi-month highs.
Corpus Christi’s forecasted return of feed gas demand to normal by July 23 is expected to coincide with warmer temperatures, supporting the outlook for stronger overall gas demand and higher spot prices .
Forecasts from Platts Analytics and CustomWeather show that the Texas average daily temperature is rising steadily over the next seven days, from 80 degrees Fahrenheit on July 21 to 87 F on July 27. The National Weather Service forecast also supports this view, with the high temperature in Houston forecast to drop to 97 F on July 25 from 90 F on July 21.