The U.S. EIA says that in 2019, on an annual basis, the United States became the world’s third-largest LNG exporter with only Qatar and Australia exporting more LNG. However, new market data from IHS Markit in the EIA update shows that daily natural gas deliveries to U.S. facilities that produce liquefied natural gas for export are down by as much as 60 percent between March and June 2020.
Another sign of the continuing weak demand comes from the dramatic decline in the number of gas cargos loading. More than 40 LNG cargoes scheduled to be loaded in August at U.S. export terminals have been canceled by customers, similar to what was reported for July, according to the market report from S&P Global Platts.
Fewer loadings at U.S. LNG terminals translates according to Platts to less gas needed to be delivered to those terminals. In turn, that impact ripples through the entire channel to interstate pipeline operators, U.S. shale gas drillers, and tanker owners. As a result, rates for LNG shippers have declined dramatically and more ships are operating only shorter trips.
Since April, when the market impact from the virus began to take shape, about 130 cargoes have been canceled for loading in the U.S., according to a tally by S&P Global Platts based on information from market sources. Utilization at the six major U.S. liquefaction terminals was at about 40 percent in late June, based on feedgas deliveries, Platts Analytics data showed.
Based on the number of canceled cargoes, EIA expects U.S. LNG export capacity will be utilized at less than 50% during June, July, and August 2020.
Even with signs of improving economics, Platts concluded that the total suggests weak demand will persist through late summer. Activity, however, could pick up in the fall depending on the trajectory of the coronavirus pandemic.
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