Analysis: Sabine Pass LNG tops nameplate

Louisiana's Sabine Pass LNG export terminal has been operating above nameplate capacity since placing its fourth liquefaction train into long-term service three months ago, likely increasing the availability of spot cargoes.

Gas intake at Sabine Pass has averaged about 2.86 Bcf/d (81mn m³/d) since the fourth train started long-term operations on 9 October, according to pipeline nominations.

Assuming that 10pc of that gas is used in liquefaction, gas intake for baseload production from four trains would be about 2.75 Bcf/d and about 3.05 Bcf/d for peak production. Cheniere has said that it has been consuming less than the expected 10pc of feed gas in the liquefaction process.

Production rates have increased since October, with gas intake averaging 2.87 Bcf/d since November and 2.92 Bcf/d since December.

Cheniere sells most of its output under 20-year contracts, so production in excess of baseload levels would likely increase the availability of spot cargoes. Six of the 23 cargoes that Sabine Pass exported in October were sold under spot contracts, according to the most recent monthly update from the US Department of Energy. Three of the 16 cargoes that Sabine Pass sold in September were spot, while two out of 13 in August and three out of 15 in July were spot.

It is unclear to what extent Cheniere auctions spot cargoes on a free-on-board basis, as the company tries to maximize its revenue by chartering vessels and delivering cargoes. Cheniere delivered at least half of the spot cargoes in October, according to an Argus analysis of shipping data.

Sabine Pass owner Cheniere Energy is building five liquefaction trains at the $20bn facility, each with peak capacity of 5mn t/yr, equivalent to about 694mn cf/d of gas, and baseload capacity of 4.5mn t/yr, or 625mn cf/d of gas.

Clear patterns for production and exports at Sabine Pass have not emerged since the first export in February 2016 because of the commissioning and ramp-ups of each successive train. But patterns could now become clearer, as train 5 is not scheduled to come on line until the second half of 2019.

Production rates are not the only factor in determining the availability of spot cargoes. Other factors include commissioning and the timing of long-term contracts. For example, the fourth liquefaction train was financed by a 20-year contract to sell 3.5mn t/yr to Indian gas utility Gail that will start on 1 March 2018. Until then, Cheniere can market all the output from train 4 on its own.

Sabine Pass intake dropped for a few days this week as domestic gas prices rose amid a cold wave that gripped much of the country. Intake fell to 1.8 Bcf on 2 January, the lowest daily volume since 1.77 Bcf on 2 October. Intake rose to 2.7 Bcf on 3 January, 2.86 Bcf on 4 January and 3.16 Bcf today.