Natural gas spot prices at key regional hubs near US LNG terminals soared today as a winter storm sweeps the country, topping fob LNG values and incentivizing some offtakers to reinject their supplies to domestic markets.
Customers with LNG tolling arrangements have more flexibility than those with sales and purchase agreements because they control their gas supply and are not obligated to liquefy it. This can spur traders to redirect gas to much more profitable domestic markets in extreme weather rather than export the volumes. Texas' 17.3mn t/yr Freeport, Louisiana's 15mn t/yr Cameron, Georgia's 4mn t/yr Elba Island and Maryland's 5.75mn t/yr Cove Point primarily operate on tolling agreements.
Weighted average day-ahead feedgas costs from hubs near those LNG terminals surged to between $20-52/mn Btu on 23 January, likely discouraging exports (see chart). Those prices are much higher than Argus' spot LNG price for January-loading LNG on the Gulf coast, which averaged $8.27/mn Btu in December. Prices for LNG delivered to northwest Europe in the second half of February also were below the US spot prices, settling on 23 January at $12.99/mn Btu, according to Argus data.
Preliminary feedgas nominations as of 6pm ET for the gas day beginning at 10am ET on 24 January showed less volume going to Freeport, Elba Island and Cove Point than the day prior, with Elba Island set to reinject about 555mn ft³ into the grid. Nominations to Cove Point halved to about 160mn ft³, and flows to Freeport were set to drop by 41pc to 1.2bn ft³. Nominations to Cameron were marginally lower at 1.9bn ft³, which would be the lowest since 30 October if realized.
The arctic blast cold also shut in capacity at other US LNG facilities due to operational issues, such as frozen equipment on pipelines and compressor stations.
