A combination of factors has helped boost storage in recent weeks.
On the supply side, dry gas production continues to be at record levels, averaging just shy of 100 Bcf/d so far in October.
Domestic balances have also been boosted by recent outages at the 2-Bcf/d Freeport LNG and the 700-MMcf/d Cove Point LNG export facilities, meaning that 2.7 Bcf/d of natural gas, which is usually exported as LNG, has instead been directed into the local market since June and late September, respectively.
This suggests that Freeport could achieve 85% adjusted nameplate capacity by the end of November, Rystad reported.
However, the facility’s restart could yet be delayed, which would require the vessels to either increase voyage time or idle offshore in the Gulf of Mexico.
Freeport’s restart timeline could have a significant impact on gas prices as the US heads into the winter months.
Once both Cove Point and Freeport have restarted and are exporting into the global market, weather forecasts will likely be trending colder, putting upward pressure on natural gas prices.
In this scenario, Henry Hub gas prices could hover closer to $7 per million British thermal units this winter, supported by Rystad's expectation that LNG exports will remain robust and there will be increased demand for heating this winter on limited coal-switching options.
However, there is still much uncertainty over winter weather forecasts and hence demand.
10.18.2022