After a multi-year decline, LNG imports to the US are up sharply this year off a smaller base, driven by demand in northeast states.
According to US Energy Department statistics, US LNG imports totalled 52.6 billion cubic feet (Bcf) in January-July 2015, up 43% from 36.9 Bcf in the same period last year. The volume of LNG imported to the US during the first seven months of this year is already nearing the full-year 2014 total of 59.1 Bcf.
This year’s import activity has been dominated by the Everett terminal in Massachusetts, which sources most of its LNG from Trinidad. The majority of imports were frontloaded into the first quarter.
Import demand, which is expected to pick up again in the fourth quarter, is being driven by winter weather conditions and pipeline limitations in the northeast US states, which create higher pricing that attracts LNG cargoes.
According to IHS Energy, cargoes imported to Massachusetts in January and February 2015 were priced at $11.80/million British Thermal Unit (MMBtu), over quadruple the cost of LNG imported to Elba Island in Georgia.
According to IHS Energy senior LNG researcher Andres Rojas, the US northeast should see another influx of cargoes in the months ahead. As of 28 September, US northeast gas price futures for December and January stood at USD8 and USD10.25/MMBtu respectively. “At these price levels we can expect more LNG to flow into this market when compared to last year as global LNG spot prices come under pressure due to oversupply in the market,” said Rojas.
“Pipeline constraints in the US northeast along with harsh winters usually result in a spike in natural gas prices in the region,” Rojas continued, noting that there are three LNG terminals capable of serving this market: Everett, Excelerate’s Northeast Gateway and Repsol’s Canaport LNG terminal. “We expect all three terminals to be more active this winter,” he affirmed.