September 21, 2021 Read More →

Manufacturers trade group asks government to curb LNG exports

S&P Capital IQ ($):

A manufacturers trade group urged the U.S. Department of Energy to order U.S. LNG producers to curb exports of the fuel, warning of potential winter price spikes and supply shortages.

“We urge you to take immediate action under the Natural Gas Act to prevent a supply crisis and price spikes for consumers this winter by requiring LNG exporters to reduce export rates in order to allow U.S. inventories to reach the 5-year average storage levels,” wrote Paul Cicio, president and CEO of Industrial Energy Consumers of America, or IECA, in a Sept. 17 letter to Energy Secretary Jennifer Granholm. “U.S. consumers, the health of the economy, and national security should take priority over LNG export profits.”

Domestic natural gas prices have surged in 2021. Prompt month futures contracts have jumped more than 90% since the start of injection season in April. Flat production and steady LNG export demand helped to push NYMEX gas futures prices for the coming months beyond $5/MMBtu.

At the same time, favorable market dynamics have kept the six major LNG exports that operate in the U.S. producing at close to their full capacity for months, with a large spread between U.S. Henry Hub gas prices and prices in end-user markets in Asia and Europe. Feedgas deliveries to the U.S. LNG export terminals totaled about 10.5 Bcf/d on Sept. 19, according to S&P Global Market Intelligence pipeline flow data.

IECA attributed low natural gas storage levels in the U.S. to higher year-over-year exports of LNG and said Henry Hub prices would need to hit some $10/MMBtu to incentivize enough production to satisfy domestic gas demand. At these prices, many manufacturers would be uncompetitive, the trade group said.

[Corey Paul]

More: US industrial manufacturers group wants DOE to limit LNG exports

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