CalculatingTheImpactOfLNGExportsOnThePriceOfNaturalGas

Aug.22.16|About:TheUnited(UNG)

Summary

LNGexportsbeganinlateFebruaryfromCheniereEnergy'sSabinePassfacility
andhavesinceprovidedaconsistentsourceoftemperatureindependentnatural
gasdemand.

ThisarticlediscussestheimpactofLNGexportsbothonthenaturalgasstorage
pictureaswellasonthepriceofthecommodityoverthelast9months.

Mynaturalgassentiment,outlook,andpositionsarediscussedindetail.

Thenaturalgasindustryunderwentyetanotherevolutionthisspringwiththeonsetof
liquefiednaturalgas((NYSEMKT:LNG))exportsfromCheniereEnergy's(LNG)Sabine
Passterminal.OriginallyconceivedasanLNGimportterminalinthelate2000spriorto
thesurgeindomesticproductionandcollapseinpricesduetotheFrackingBoomthat
madeimportsuneconomical,theSabinePassfacilitywasconvertedtothefirstUSexport
terminalover7years.Afternaturalgasbeganflowingtothefacilityinstopsandstartsin
lateNovember2015,thefirstLNGcargodepartedonFebruary24viathetankerAsian
Vision.Sincethen,morethan20tankershavedepartedthefacilityandanewindustry
wasborn.Butwhatimpact,ifany,hasLNGhadontheUSpriceofnaturalgas?This
articlediscussesthemagnitudeofLNGexportsandtheroletheyhaveplayedinwhathas
beenadynamicsummerforthedomesticnaturalgasmarket.

FeedgasdeliveriestoSabinepassarefedprimarilybyCheniereTrail'sownCreoleTrail
pipelinewithadditionalconnectionsfromtheTETCO,Transco,andTrunklinepipelines.As
Figure1belowshows,therehavebeen2stagesofgrowthofLNGexportsoverthepast
6months.
Figure1:DailynaturalgasfeedgasdeliveriestoSabinePassshowinginitiationof
Train1inlateFebruaryandTrain2inlateJulywithdeliveriespeakingat1.3
BCF/day.[Source:CelsiusEnergywithdatafromCreoleTrail,Tetco,Trunkline&Transco
Pipelines]