(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – After the Russian invasion of Ukraine, the International Energy Agency released a 10-point plan to reduce the EU’s dependence on Russian natural gas. In 2021, Russia supplied about 15 bcf/d to the EU with all but about 10% arriving by pipeline. While much of the plan involved accelerating green energy and various forms of conservation, a significant part of the plan was to change gas sourcing. Shortly after the 10-point plan was announced, Germany announced that it was supporting the construction of its first two LNG import and regassification terminals with a total capacity of about 2 bcf/d. Another part of the plan was to implement a 90% rule which is a date by which European countries need to have their gas storage levels at 90%. This is an effort to spread out LNG receipts to normalize capacity utilization of these facilities. In January 2022, the EU received a record 6.5 bcf/d from the US. On March 16, the US Department of Energy (DOE) issued two long-term orders authorizing LNG exports from two current operating LNG export projects, Cheniere Energy Inc.’s Sabine Pass in Louisiana and Corpus Christi in Texas. The two orders allow Sabine Pass and Corpus Christi additional flexibility to export the equivalent of 0.72 bcf/d of LNG to any country with which the US does not have a free trade agreement, including all of Europe. The US currently has about 11 bcf/d of LNG export capacity with another 8 bcf/d under construction. The 14 approved facilities have an additional capacity of 20 bcf/d. For pipelines, the most exciting part of this is those 14 US LNG export facilities that have been approved but have not had an FID. We believe that the current situation is likely to lead to a willingness by EU countries to sign long term commitments with US LNG providers which may help facilitate a positive FID on some of these facilities. A quick check of the LNG pipelines that are at some pre-construction stage indicates a total of 1,789 miles; all in the 36-42 inch OD range. Import Supply – The January import total was 57,282 tons which was nearly 40,000 tons less than the license tally from last month. February import licenses show a further increase in volume to 49,213 tons. The March forecast, with 10 of 23 days summed, is over double at 130,000 tons. We would be surprised by this level. The top import item for the month of January 2022 was Carbon Smls, not over 4 ½” OD, at 11,736 tons. The price was $1,358/ton. This category rarely leads the monthly report.
Preston Pipe Report – March 2022
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