International
Excelerate’s Northeast Gateway Terminal Ramps Up Send-out in Arctic Blast
Excelerate Energy L.P.’s (Excelerate’s) Northeast Gateway Deepwater Terminal (Northeast Gateway), located offshore Boston, reached a peak send-out flow rate of over 800,000 MMBTU per day of natural gas on February 1, 2019, a first for the terminal. The operation was completed by two of Excelerate’s floating storage regasification units (FSRUs), Exemplar and Express discharging in parallel through Excelerate’s proprietary offshore buoys.
During the coldest days of the year, demand for natural gas from residential customers rises in New England. Historically, during these times, as natural gas deliverability becomes constrained, power generators have been forced to burn dirtier fuels such as oil. This year, liquefied natural gas (LNG) imports from Excelerate’s Northeast Gateway facility have complimented the system by providing a stable, reliable supply of clean energy during this peak demand, allowing generators to continue burning natural gas. Excelerate Energy L.P.’s (Excelerate’s) Northeast Gateway Deepwater Terminal (Northeast Gateway), located offshore Boston, reached a peak send-out flow rate of over 800,000 MMBTU per day of natural gas on February 1, 2019, a first for the terminal. The operation was completed by two of Excelerate’s floating storage regasification units (FSRUs), Exemplar and Express discharging in parallel through Excelerate’s proprietary offshore buoys.During the coldest days of the year, demand for natural gas from residential customers rises in New England. Historically, during these times, as natural gas deliverability becomes constrained, power generators have been forced to burn dirtier fuels such as oil. This year, liquefied natural gas (LNG) imports from Excelerate’s Northeast Gateway facility have complimented the system by providing a stable, reliable supply of clean energy during this peak demand, allowing generators to continue burning natural gas.
Europe LNG wave has traders weigh end of Asia premium
The premium that Asia traditionally has paid for liquefied natural gas has tumbled as a mild winter damps demand, boosting supply in Europe to records and eroding prices there.
The trend is a threat to Russia and its dominant gas company, Gazprom PJSC, and a boost to utilities burning the fuel to generate electricity. Mild winter weather across Asia along with stockpiling earlier in the season by buyers anxious to avoid last year’s crunch sent the benchmark Japan/Korea Marker to a 17-month low.
Cargoes of LNG that usually would have gone to Asia now are landing in Europe, which at least for the moment is absorbing the excess. The sheer volume of fuel arriving into northwest European markets has pushed down prices there too and is a “big surprise” not anticipated by many market participants, according to Bart Riemens, head of gas trading at Axpo Holding AG.
“People will start realising how much gas we are swimming in,” he said.
On top of that, new production facilities, including in the US and Russia, have added to the amount of LNG looking for buyers in the market. Those flows have more than offset record-high purchases by China.
The benchmark next-month gas contract in the Netherlands, Europe’s biggest market, has lost 30% since the winter season started on October 1, trading near €19 per megawatt-hour on Thursday. It may drop another €1 or €2 over the next month or two, if other commodities and temperatures remain at current levels, Riemens said.
“There may be of course times when this may not be the case, but going forward, historical spreads JKM versus Europe are not likely,” Riemens said by telephone. “This is what we are already seeing now, and we will see more flattening of the spread, if not complete convergence for the majority of times.”
Some in the market believe the current situation is temporary and Asia will pay more for its fuel soon. The Norwegian energy company Equinor ASA acknowledges that a long-anticipated wave of LNG has finally hit but doesn’t expect it to last.
“This is the first year when we will see this wave of LNG we had expected to see,” Tor Martin Anfinnsen, senior vice president at Equinor, said in an interview in Essen, Germany. “But 2020 is the last year of the current fleet of LNG. So it is potentially very short-lived.”
There will still be imbalances and periods when either Europe or Asia become the best market for LNG, Peder Bjorland, vice president for marketing and trading natural gas at Equinor, said in the same interview.
“There will still be cargo movement from one region to another,” he said.
For now, prices are low enough in Asia that there’s little incentive to ship more cargoes there. The arbitrage between Europe and Asia is expected to remain closed throughout the year, according to analysis by BloombergNEF.
China is a big part of the shift. It built up its storage levels through the summer, lifting the gas price worldwide, then slacked off when the heating season started in October. So far, the winter hasn’t been cold enough there to absorb all the gas.
That’s added to a supply boom in Europe. Russia has been shipping gas into Europe at near record rates by pipeline, and more LNG cargoes are arriving than in the summer. Axpo anticipates additional demand for gas in power generation in Europe and increased competition between pipeline gas and LNG.
https://www.hellenicshippingnews.com/europe-lng-wave-has-traders-weigh-end-of-asia-premium/
U.S. drillers add oil rigs for second week in three -Baker Hughes
U.S. energy firms this week increased the number of oil rigs operating for the second time in three weeks after oil prices soared over 18 percent in January.
Companies added 7 oil rigs in the week to Feb. 8, bringing the total count to 854, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
The U.S. rig count, an early indicator of future output, is still higher than a year ago when 791 rigs were active after energy companies boosted spending in 2018 to capture higher prices that year.
In 2019, however, some drillers have said they plan to remove rigs due in part to forecasts for lower crude prices than last year.
In the Permian basin in West Texas and eastern New Mexico where more than half the U.S. oil rigs are located, active units fell by three this week to 478, their lowest level since July. The Permian is the nation’s biggest shale oil field.
Liberty Oilfield Services Inc this week estimated roughly 20 percent of the hydraulic fracturing fleets that were active in mid-2018 have now been idled or are being idled.
U.S. crude futures were trading slightly under $53 a barrel on Friday, down about 5 percent for the week on worries of a global economic slowdown.
Looking ahead, crude futures were trading around $54 a barrel for the balance of 2019 and $55 for calendar 2020. EIA projected West Texas Intermediate WTC- spot crude would average $54.19 in 2019 and $60.76 in 2020, down from an average of $65.06 in 2018.
U.S. financial services firm Cowen & Co said this week that early indications from the exploration and production (E&P) companies it tracks point to a 1 percent increase in capital expenditures for drilling and completions in 2019.
Cowen noted larger spenders, like BP Plc and Chevron Corp, appear to be more resilient and have spending up year-over-year, while smaller, gas-exposed operators are generally down.
In total, Cowen said those E&P companies spent about $88.7 billion in 2018.
There were 1,049 oil and natural gas rigs active in the United States this week, according to Baker Hughes. Most rigs produce both oil and gas.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and gas rig count will fall from 1,032 in 2018 to 999 in 2019 before rising to 1,087 in 2020. That was the same as its forecast last week.
