(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – As new US LNG facilities move toward completion, the country remains in a delicately balanced supply/demand situation that contributed to sub-$2.00/mmbtu gas prices right up until the last few weeks. That was mostly the product of growing production and warm winter weather. The upward movement in gas prices recently is attributable to a variety of factors which include weaker production due to lower gas directed drilling levels. One component of US supply is pipeline imports from Canada. In 2023 Canada supplied about 8 bcf/day to the US market which satisfied about 8% of US gas demand that year. Some analysts are suggesting that once LNG Canada starts up, pipeline exports to the US could be curtailed from time to time depending on relative market prices. LNG Canada, which is currently undergoing testing and is expected to begin commercial operations in mid-2025, has a capacity of 2 bcf/day representing about 11% of current Canadian gas output. This, along with other upcoming US and Canadian LNG capacity should significantly improve the natural gas situation for producers. It was announced in early May that Williams Company has opted to discontinue its Northeast Supply Enhancement pipeline endeavor. This pipeline would have moved natural gas through New Jersey and under two bays to New York and would have included a gas-fired compressor station in Franklin Township, and the installation of more than 23 miles of pipeline through the Raritan and Lower New York bays en route to the Rockaway section of Queens in New York City.
Preston Pipe Report – May 2024
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