NEW YORK—Natural gas flows to U.S. LNG export plants plunged this month after falling to a 20-month low in June as coronavirus lockdowns cut global demand for the fuel.
Before the pandemic slashed energy demand, U.S. producers counted on LNG exports to keep growing fast as an outlet for their record gas output. But after soaring 68% in 2019 and 53% in 2018, U.S. LNG exports were only expected to rise about 7% in 2020.
Gas pipeline flows to U.S. LNG export plants dropped to an average of 3.1 billion cubic feet per day (Bcf/d) so far in July from a 20-month low of 4.1 Bcf/d in June and a record high of 8.7 Bcf/d in February, according to Refinitiv data.
With U.S. LNG capacity rising as new units enter service, utilization of those plants has collapsed from 85%–90% in 2019 to just 32% so far this month as buyers cancel dozens of cargoes.
Analysts at Simmons Energy, energy specialists at U.S. investment bank Piper Sandler, projected U.S. LNG utilization will hover between 60% and 70% over the next several years.
So far this month, only five vessels picked up cargoes from the six U.S. LNG export plants—two from Cheniere Energy Inc.’s Sabine Pass in Louisiana, two from Cameron LNG’s plant in Louisiana and one from Dominion Energy Inc’s Cove Point in Maryland, according to Refinitiv.
No ships have visited Cheniere’s Corpus Christi plant in Texas since June 29, Freeport LNG in Texas since June 27 or Kinder Morgan Inc’s Elba Island plant in Georgia since January.
The number of vessels carrying U.S. LNG peaked at 74 in January, according to federal data. But Refinitiv data said the number of vessels carrying U.S. LNG fell to 50 in May and a 16-month low of 31 in June.
Pipeline infrastructure coming online is expected to unleash associated gas from the Permian Basin’s vast oil production, overwhelming the market, recent report says.
Traders noted natural gas output was rising as EQT Corp. boosted production in Appalachia.
The U.S. Energy Department on July 6 approved the export of up to 1 Bcf/d of LNG from the proposed Jordan Cove terminal in Oregon, a move it said would ease U.S. sales of the fuel to Asian markets.