Liquefied natural gas (LNG) began flowing again at one of the largest export facilities this week, more than seven months after an explosion idled operations. The Freeport, TX facility is the nation’s second largest and currently accounts for 25 to 30 percent of U.S. LNG export capacity.

After completing inspections and safety reviews, liquefaction trains were restarted in early February. This equipment chills natural gas under pressure to convert it into LNG, ultimately destined for loading on vessels for export. Europe accounts for much of the current demand for LNG following sanctions and curbs on Russia’s exports after its invasion of Ukraine.

Capable of converting nearly 2.1 billion cubic feet (Bcf) of natural gas, the Freeport facility is not expected to return to full operation until mid-March, but its return to more normal operations will raise natural gas demand in coming months. Fortunately, winter has been mild across much of the U.S. East Coast, limiting this heating season’s drawdown of stocks.

The most recent Energy Information Administration (EIA) weekly report showed nationwide natural gas inventories at 2,366 Bcf and a second consecutive week stocks draw above 200 Bcf. However, with only part of February and March to go, winter is winding down, and we will soon flip direction as stocks begin their seasonal climb.

Current domestic stocks are 5.2 percent above the five-year average and up 10.9 percent from year-ago levels. Record warmth in the eastern U.S. and the idled Freeport facility helped keep stocks higher than anticipated and ultimately caused natural gas prices to break down to the $2.50 per mmBTU level.

We should see inventories turn the corner next month, assuming typical weather and temperatures across the country. Starting with a higher inventory figure will help the country rebuild stocks over the spring and summer despite higher LNG export activity in coming months.

U.S. exports of natural gas (Freeport, TX)

Source: EIA
Posted by: Information Services
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