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Record LNG Flows See Limited Upside in 2024

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US LNG feedgas flows are averaging nearly 14.2 Bcf/d through November and December, the highest on record. But upside looks limited from here until new liquefaction projects start toward the end of 2024, according to East Daley’s Macro Natural Gas Supply and Demand Forecast.

Two export facilities in particular have been driving recent volume gains: Freeport LNG and Venture Global’s Calcasieu Pass.

Freeport LNG is now running at full capacity on the Texas Gulf Coast after several months of outages caused by a fire in June ’22. Freeport hit 2 Bcf/d of intake volumes in April, but dipped to an average of 1.75 Bcf/d from June to November ‘23. East Daley estimates the initial spike in volumes was a result of Freeport filling its two LNG storage tanks, as only one dock was approved for restart at the time.

The Federal Energy Regulatory Commission (FERC) only recently granted approval to Freeport to commence Phase 2 of the restart, including turning on a second LNG loop and opening Dock 2 for ship loading. We expect the additional marine berth will enable Freeport LNG to maintain its production, at least through the peak winter season.Picture1-Dec-19-2023-10-50-34-3103-PM

Venture Global has been loading commissioning cargoes for the last 24 months at Calcasieu Pass in Louisiana and saw feedgas volumes climb to a high of 1.7 Bcf/d in October and November. Venture Global is embroiled in contractual disputes with several counterparties, including Repsol and BP, who have complained to US regulators that the company is reneging on obligations to sell them cargoes during a period of high LNG spot prices.

Venture Global argues it has abided by agreed-upon contractual terms. Despite running at full operational capacity for several months, the company claims Calcasieu Pass is experiencing issues with its power train, and cannot service long-term contracts while the facility is still technically incomplete.

Venture Global expects another lengthy commissioning process at its Plaquemines LNG project. The company is targeting first gas at Plaquemines in late 2024. Customers will receive first cargoes in 2026 at the earliest, Venture Global CEO Mike Sable told Reuters.

Despite the disputes, several offtakers for Venture Global’s third project, CP2, have written to FERC and requested the agency grant approval to begin construction on the 2.67 Bcf/d export facility. These companies, closely tied to their respective national energy ministries, argue that exports from CP2 are vital to their countries’ energy balances in the coming decades. The support suggests the global need for LNG could outweigh any short-term contractual spats.

In the near term, EDA does not expect any significant changes to LNG feedgas flows, as every existing project is currently operating at capacity. In the Macro Natural Gas Supply and Demand Forecast, the next major facility to come online will be Plaquemines Phase 1 (2 Bcf/d) in late 2024. Golden Pass LNG (2.4 Bcf/d) will be next up. ExxonMobil (XOM) reported on its latest earnings that start-up of Train 1 at Golden Pass would be delayed until early 2025. – Oren Pilant Tickers: BP, XOM.

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