March LNG: No lion, all lamb

Preliminary data for LNG imports into the U.S. in March confirms what we already knew: 2008 is not going to come anywhere near the record imports of 2007, according to an analysis by Pan EurAsian Enterprises.

Just wait until next month: Cheniere’s Celestine River will show up at the Sabine Pass terminal on April 12.

According to the report 24.2 billion cubic feet (bcf) of natural gas was sent into the U.S. pipeline grid from LNG import terminals in March (yes, technically we have one more day but it’s not like an LNG tanker is going to sneak up on us).
This is less than one-third of the amount sent out in March 2007 (76 bcf) and slightly less than the amount sent out in February 2008 (24.9 bcf). There were only 10 cargoes, versus 32 in March 2007.
The reasons this year is off?

A moderate Winter in the US and new sources of domestic natural gas production in the US have kept US prices low and diminished the need to compete with other countries that are more dependent upon LNG than is the US. The largest three countries that consume LNG are Japan, South Korea and Spain.

Seven of the 10 U.S. LNG cargos came into the Distrigas terminal in Everett, Mass. None came to the Trunkline LNG terminal in Lake Charles, La., which in March of 2007 received 12 cargoes.
The new LNG import terminal in Massachusetts Bay, the Northeast Energy Gateway terminal developed by Houston-based Excelerate, has received no commercial cargos since its commissioning this year.

The prospects for April are for similar low levels of LNG imports. Whereas US prices (based on Henry Hub cash prices) in March have averaged around $9.30 per million Btus, prices in Europe (especially Spain, which relies on LNG for over 60% of its gas supplies) and Asia have been much higher, attracting cargos to those destinations, not to the US. Prices in Asian markets have been as high as $18 this year for LNG from sources that would normally send LNG to the US.

At least one new cargo is assured for next month, however. Last week Cheniere Energy said the Celestine River LNG vessel has departed from the Nigeria LNG facility with its first cargo for the Sabine Pass LNG terminal around April 12. This will be the first shipment to the facility and will be used as part of the “cool down” process to get the terminal and all its equipment to normal operating temperature.
The Freeport LNG import terminal in Quintana is also expecting its first cool down shipment in April but the company hasn’t announced a final date.