Cold Snap Chills U.S. Gas Sector

Written by Daniel Graeber for Industrial Info Resources (Sugar Land Texas)

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Summary

A surge in frigid winter weather throughout much of the U.S. has lifted demand for natural gas.

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Frigid Cold Leads to Demand Surge

A blast of cold winter weather socked much of the continental United States, leading to a surge in demand for natural gas that was met by higher imports from Canada, IIR Energy data show.

A cold front started sweeping across the northern Plains last week, pushing regional temperatures to some 30 degrees Fahrenheit below normal. Wind chills as low as 7 degrees were expected on Monday as far south as Louisville, Kentucky.

The Midcontinent Independent System Operator, an entity formed to control and monitor the regional grid, reported that energy demand levels were well above late-autumn norms. For an in-depth look at the U.S. weather, see IIR Energy's long-term forecast to December 21.

Demand is straining national supplies. IIR Energy in its NATGAS TODAY report for Monday found natural gas consumption jumped 10 billion cubic feet per day (Bcf/d) from last week's levels to move into the 114-115 Bcf/d range during the weekend due to the frigid weather.

Much of that surge in demand was satisfied by imports from Canada, which were up 1 Bcf/d from late-week levels to move closer to 8 Bcf/d during the weekend. At this time last year, data from IIR Energy show Canadian imports were closer to 6.4 Bcf/d.

The United States is a net importer of natural gas from Canada, despite its own riches. Total supplies from the Lower 48 states were around 107 billion cubic feet on Monday, down about 1.5 billion cubic feet from November's average. Much of the decline came from the Appalachia basin, the largest inland producer of natural gas.

LNG Activity Down as Well

Gas from the Lower 48 states, meanwhile, helps support the global lead in exports of liquefied natural gas (LNG) from the United States. The amount of feed gas running to the eight operational export terminals was around 18.3 Bcf for Monday, a robust level that's nonetheless shy of an all-time high at just above 19 Bcf set as recently as December 5.

Freeport LNG (Houston, Texas), which is recovering from an early-December outage at one of its liquefaction units, was operating at about 80% of its nameplate capacity of 2.37 Bcf/d.

President Donald Trump in one of his first acts of office this year bolstered the domestic LNG industry through executive action. Since his second term began, projects from Alaska to the U.S. Gulf Coast have developed along various stages and paces.

Last week, the John Wood Group PLC (Aberdeen, Scotland) said it secured a 10-year contract with developer NextDecade (Houston, Texas) to provide maintenance solutions for its planned Rio Grande LNG facility in Brownsville, Texas.

The total expected LNG production capacity currently under construction at Rio Grande LNG could be about 30 million metric tons per annum (MTPA), which the developer believes will represent about 5% of global supplies by the early 2030s. The company believes there is enough room on the 1,000-acre campus in Brownsville for up to 10 liquefaction trains.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.

By the Numbers

• 30 degrees below normal in some parts of the country
• 1.5 billion cubic feet below November levels for U.S. gas production
• 8 Bcf/d from Canada helped address demand surge

Key Takeaways

• Cold snap felt as far south as Kentucky
• Canadian imports helped meet domestic U.S. demand
• Freeport LNG operating below peak capacity

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Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).