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Today in Energy

April 14, 2011

Winter LNG deliveries played a limited, yet important role

Source: U.S. Energy Information Administration based on data from BENTEK Energy, LLC.
Published By: U.S. Energy Information Administration
Note: LNG terminals with no or minimal LNG deliveries or sendout are excluded.

Total deliveries of liquefied natural gas (LNG) by North American regasification terminals into the United States during the winter of 2010-2011 (November 1 through March 30) were modest, but important. LNG deliveries into the United States–including volumes from terminals in Mexico (Costa Azul) and Canada (Canaport) via pipeline imports–averaged almost 1.4 billion cubic feet per day (Bcfd), about 2% of estimated total marketed production.

The timing and location of these deliveries mattered. In November, a relative lack of sendout or deliveries from the North Atlantic LNG terminals in New England and Eastern Canada contributed to spot natural gas prices that were uncommonly higher than spot natural gas prices in New York City. During cold spells in January and February, North Atlantic LNG terminals (Canaport and Everett) delivered more than 1.5 Bcfd of natural gas to customers in New England. In Early February, much colder-than-normal weather in the Rockies, Gulf Coast, and Mid-continent supply areas caused freeze-offs (see February 23, 2011 Today In Energy), and Gulf Coast terminals (Sabine, Freeport, Lake Charles and Cameron) contributed greater LNG volumes.

Sendout tended to be higher from terminals delivering natural gas into the Northeast market, at terminals that rely upon longer duration contracts, or both. Because North Atlantic LNG terminals sell natural gas into the Northeast, which often reflect seasonal premiums in the winter due to weather-driven pipeline constraints, these terminals can potentially offer high prices to secure LNG supplies.