Warmup Gives U.S. Gas Pressures a Break

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

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Summary

Milder weather has curbed the appetite for natural gas following a bout of sub-freezing temperatures, though production is down. The Freeport LNG terminal, meanwhile, is recovering from another outage.

Feed Gas, Demand Slumps

After strains from severe winter weather, the U.S. natural gas sector has been subdued since the weekend cold snap, with both feed gas to the LNG export terminals and production on the decline, IIR Energy data show.

A cold front descended from Canada last week to bring frigid cold to much of the continental United States. High temperatures in the Chicago metropolitan area struggled to break out of the single digits during the weekend and the Midcontinent Independent System Operator, a regional grid monitor, reported that energy demand levels were well above late-autumn norms.

By Wednesday, however, it was a different story. Chicago was expecting highs flirting with around 50 degrees Fahrenheit, a weather pattern that could bring some relief to a U.S. natural gas sector strained by winter-weather so far.

As the temperature increases, natural gas demand for heating declines. Consumption on Wednesday was down about 10 billion cubic feet (Bcf) from the prior day to reach 93.5 Bcf. After running at around 8 billion cubic feet per day (Bcf/d) during the weekend, Canadian imports were closer to 5.7 Bcf on Wednesday.

Canada is a net exporter of natural gas to the U.S. economy. Around 40% of U.S. consumers get their electricity from natural gas, according to the federal Energy Department.

Production too was on the decline. An IIR Energy for Wednesday found production was down about 1.3 Bcf/d from the November average, led by declines in the Northeast and Gulf Coast region. Levels are still higher than last year, however.

More Issues at Freeport

The amount of feed gas running to the export terminals for liquefied natural gas (LNG) was down as well, though it wasn't necessarily related to the slump in production. The Freeport LNG terminal suffered an outage at one of its liquefaction units earlier this week, dragging the amount of gas deliveries down to about half of the design capacity of 2.37 Bcf/d.

Feed gas had recovered by Wednesday, though the terminal had only received about 1.9 Bcf.

Located in Freeport, Texas, the facility has experienced regular issues since operations began in 2019. Feed gas dropped in half, from 1.8 billion cubic feet to 900 million cubic feet, in early November, and then moved as low as 400 million cubic feet after the Gulf South Pipeline, one of nine arteries feeding the Freeport terminal, said deliveries were suppressed after the operator failed to take confirmed quantities at a delivery meter.

Boardwalk Pipeline's (Houston, Texas) Gulf South network declared force majeure in March due to a "weather-related impact to downstream third-party facilities." The outage forced Freeport LNG, the fourth-largest LNG export facility by feed gas volume, to take all three of its liquefaction units, or trains, offline.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Plant Database can learn more about the Freeport LNG plant--including capacities, investment values and necessary equipment--from a detailed plant profile.

Feed gas volumes should hold steady next year at around 16 Bcf/d, according to federal estimates. Natural gas production from the Lower 48 states, meanwhile, is on pace to increase by around 1.5% from 2025 levels to average 117.2 Bcf/d next year.

Looking ahead at short-term weather, trends point to above-normal temperatures east of the Mississippi River, though wind gusts as strong as 60 miles per hour are expected for the Northern Plains. Overnight wind chills in parts of northern Montana could be as low as 15 degrees below zero.

• 50-degree temperature swing in Chicago
• 1.3 Bcf/d decline in gas production from November
• 5.7 Bcf imported from Canada on Wednesday

Key Takeaways

• Warmer weather takes pressure off gas
• Freeport recovering from an outage
• Gas production should increase next year

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About Industrial Info Resources
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).