U.S. natgas fall 3% on milder weather despite Freeport LNG return

That price decline came even though liquefied natural gas (LNG) exports jumped to their highest since May 2022 after a vessel picked up a cargo from Freeport LNG’s long-idled export plant in Texas and the facility started pulling in more pipeline gas to cooldown one of its three liquefaction trains.

Front-month gas futures for March delivery fell 7 cents, or 2.8%, to $2.444 per million British thermal units at 11:30 a.m. EST (1630 GMT). On Feb. 8, the contract closed at a 25-month low of $2.396.

Freeport, the second biggest U.S. LNG export plant, shut in a fire in June 2022. Gas flows to the plant were on track to reach 0.5 billion cubic feet per day (bcfd) on Monday, up from an average of 43 million cubic feet per day since Jan. 26 when federal regulators approved the company’s plan to start cooling parts of the plant.

That is still only a fraction of the roughly 2.1 bcfd of gas Freeport can pull in to make LNG when operating at full power. Energy regulators and analysts have said Freeport will likely not return to full capacity until mid March or later.

A couple of Freeport’s customers – Japan’s JERA and Osaka Gas – have said they do not expect to get LNG from the plant until after March.

With the amount of gas flowing to Freeport rising the average amount of feedgas going to U.S. LNG export plants climbed to 12.7 bcfd so far in February, up from 12.3 bcfd in January. That compares with a monthly record of 12.9 bcfd in March 2022 before Freeport shut.

On a daily basis, however, LNG feedgas was on track to reach 13.3 bcfd on Monday, the most in a day since May 2022 before Freeport shut in June 2022.

The seven big U.S. export plants, including Freeport, can turn about 13.8 bcfd of gas into LNG.

U.S. GAS OUTPUT

Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 97.0 bcfd so far in February, down from 98.3 bcfd in January. That compares with a monthly record of 99.8 bcfd in November 2022.

On a daily basis, however, production hit a two-week high of 98.6 bcfd on Saturday as oil and gas wells return to service after freezing earlier in the month in several states, including Texas, New Mexico, Oklahoma and Pennsylvania. The energy industry calls output declines from freezing wells freeze-offs.

Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 28 except for a few cold days around Feb. 17-18 and Feb. 23-25.

With three cold days expected next week versus just two this week, Refinitiv forecast U.S. gas demand, including exports, would rise from 119.2 bcfd this week to 122.6 bcfd next week. Those forecasts were lower than Refinitiv’s outlook on Friday.

Energy analysts, however, noted that colder than normal weather in late February does not boost heating demand by as much as cold in late January. The 30-year average temperature in the U.S. Lower 48 states is about 37 degrees Fahrenheit (3 Celsius) on Jan. 25 versus 42 F on Feb. 25, according to data provider Refinitiv.