Feed Gas for U.S. LNG Dipped in Q2

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Maria Sanchez, a natural gas analyst at Industrial Info, said maintenance at the Freeport LNG facility is curbing the potential for exports. Feed gas levels are around 2 Bcf/d below recent records.

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3% Quarterly Drop in Feed Gas

With the Freeport LNG terminal in the midst of an extended period of maintenance, Industrial Info data show the total amount of feed gas supporting U.S. exports dipped during the second quarter.

Industrial Info in its NATGAS Today report showed the total amount of feed gas running to the nine operational export terminals for liquefied natural gas (LNG) was around 17 billion cubic feet per day (Bcf/d) over the seven-day period ending July 24.

That's well short of the record of just over 19 Bcf/d set in late December. Maria Sanchez, a senior natural gas analyst at IIR Energy, said sector-wide activity is down from the first quarter.

"Total feed gas averaged 18.4 Bcf/d during the first quarter, though that fell to 17.8 Bcf/d during the three-month period ending June 30," she said.

The Freeport terminal is among those experiencing setbacks. Industrial Info found the plant is limited by maintenance due to an interruption to its incoming power on July 15. The plant could be back to full service by the end of the month, though feed gas levels are still curtailed.

Sanchez in her latest report said total LNG export levels are curbed by the ongoing maintenance at Freeport.

Meanwhile, production that would support feed gas increased sequentially so far this year, Sanchez found. Her data showed an inland production sample averaged 109.8 Bcf/d during the first quarter, rising another 1.1 Bcf/d during the three-month period ending June 30.

There were no impacts along the Gulf Coast from Tropical Storm Bertha, which fell apart off the southern coast of Louisiana and Texas earlier this week.

Down, But Certainly Not Out

While quarterly levels were suppressed, the LNG sector across North America in particular is in the midst of a growth spurt. IIR Energy finds that four of the operational export terminals along the U.S. Gulf Coast are busy with expansion efforts. The largest would be from trains 19-36 at the Plaquemines terminal, operated by Venture Global LNG. Expansions would add another 1.96 Bcf/d to its feed gas capacity.

But while natural gas production increased quarter-on-quarter, federal estimates show gains will not keep pace with the expected 8.1% increase in U.S. LNG exports annually to 2027.

The United States, however, remains the world leader in LNG exports, and will remain so for the foreseeable future because of complications stemming from the war in the Middle East.

Shell, in an industry report issued during the height of the conflict, said it was expecting a substantial increase in LNG trade this year, but now says levels could be similar to last year, provided maritime trade starts to move freely through the region.

That's unlikely as U.S. President Donald Trump opts to escalate military strikes on Iran, after praising the terms of a 14-point memorandum of understanding on a truce in June. This week, the president said Iran's infrastructure would be bombed for every incident in regional waters.

Saudi tankers were targeted this week by the Houthi rebel group in Yemen, which has support from Iran. The U.S. military on Thursday said it diminished Iran's ability to threaten traffic by targeting drone facilities.

The U.S. government claimed commercial vessels are navigating freely through the Strait of Hormuz, with U.S. military support.

By the Numbers

• 8.1% annual increase expected in LNG exports to 2027
• 3% dip in feed gas supporting those exports between Q1 and Q2

Key Takeaways

• Maintenance curbing U.S. LNG potential -- for now
• Natural gas production might not be able to keep up

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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, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).