Sabine Pass LNG feedgas deliveries drop amid upstream pipeline maintenance

Feedgas deliveries to Cheniere's Sabine Pass LNG have fallen nearly 1 Bcf since the start of October, amid planned maintenance limiting natural gas deliveries to one of the export facility's key supply pipelines.

Pipeline nomination data shows total gas deliveries to Sabine Pass dropped to 4.05 Bcf Oct. 3, down 18% from 4.93 Bcf Oct. 1. A sharp drop in receipts from Kinder Morgan Louisiana Pipeline accounted for the bulk of the decrease, with flows falling to around 854 MMcf Oct. 3 from 1.42 Bcf Oct. 1.

The decrease in flows on KMLP can be traced back in part to lower inflows onto the pipeline from Texas Gas Transmission.

Pipeline maintenance

Texas Gas Transmission, a subsidiary of Boardwalk Energy Partners, has two planned pipeline maintenance projects that may be limiting flows to KMLP, which plunged to zero Oct. 3.

The first maintenance project involves Texas Gas' Columbia Compressor Station in northeast Louisiana and began Sept. 22. Pipeline nomination data shows that this project had an immediate effect on deliveries to Kinder Morgan at Eunice, cutting deliveries to around 65 MMcf/d for Sept. 23-Oct. 2, down from 210 MMcf/d for Sept. 1-22. A second maintenance project on Texas Gas's North Louisiana Lateral will run Oct. 4-13, restricting flows on its Carthage East-West segment to around 250 MMcf/d.

Spot-pricing impact

Carthage Hub's discount to cash Henry Hub has remained above $1/MMBtu since mid-September, with record-high Haynesville gas production starting to bump up against the existing takeaway capacity limits. Modeled production data from S&P Global shows that Haynesville set a new daily and monthly record in September, reaching 15.64 Bcf Sept. 27 and averaging 15.2 Bcf/d for the month.

With takeaway options more constrained from both maintenance and strong production, storage injections on the Texas Gas system have been ramped up, giving spot basis spreads some relief. At both locations' Oct. 3 preliminary settlement, the Carthage Hub-Henry Hub spread had narrowed back to a $1.205 discount.

Daily storage injections from the Texas Gas system climbed to an average of 615 MMcf Oct. 1-3, nearly double the 325 MMcf averaged during the last 10 days of September.

Outlook

With Texas Gas maintenance projects scheduled to run through mid-October, other pipelines may be utilized to increase flows to KMLP and on to Sabine Pass. One option could be Columbia Gulf Transmission, which announced in September that its Louisiana XPress Project would come fully online by Oct. 1, increasing capacity from northeastern Louisiana south toward coastal Louisiana.

There may be some room on other pipelines that deliver gas directly to Sabine Pass to reroute flows as well, pipeline nomination data suggests. Deliveries to Sabine Pass from Creole Trail Pipeline, Natural Gas Pipeline Co. of America, and Transcontinental Gas Pipe Line came in below full operational capacity limits Oct. 3.