Oil Plunge Boosts US Gas Imports to 7-Year High

Oil Plunge Boosts US Gas Imports to 7-Year High
Oil Plunge Boosts US Gas Imports to 7-Year High

The plunge in global crude oil prices has helped boost US natural gas imports to the most in at least seven years, even as the country prepares to start exporting cargoes, Bloomberg reported.

Deliveries to onshore pipelines from liquefied natural gas terminals in Massachusetts and Maryland on Jan. 8 were the most in data going back to December 2007, according to Ventyx data compiled by Bloomberg. Volumes in January are more than six times higher than a year ago, when the polar vortex spurred record consumption.

Crude oil, used as a benchmark for LNG around the world, fell by almost 50 percent last year, making imports competitive in the eastern US, where a lack of adequate pipeline capacity keeps local prices high. LNG was driven from US shores in the middle of the past decade as surging output from shale formations sent natural gas prices tumbling.

US LNG imports plunged 80 percent from 2007 to 2013, according to Poten & Partners, a global energy broker. Cheniere Energy Inc., the developer of the first US LNG export terminal in decades, expects to begin overseas shipments later this year.

Global Prices

Northeast Asia spot LNG is going for about $10 per million British thermal units while the price in Europe “has fallen quickly” to about $6.80, Trevor Sikorski, head of natural gas, coal and carbon analysis at Energy Aspects Ltd. In London, said. It costs about 40 cents per million Btu to ship LNG from Trinidad to New England, 80 cents to Europe and $2.80 to Japan, he added.

Spot gas at Algonquin City Gates, which includes delivery to Boston, reached $15 per million Btu Jan. 6 on the Intercontinental Exchange. Prices settled at $9.81 on Saturday.

Northeast gas is trading at a premium to the rest of the US as limited pipeline capacity keep it from taking advantage of record shale-gas production from the Marcellus fields in Pennsylvania and West Virginia.

Excelerate Energy LP delivered gas from its Northeast Gateway port into New England for the first time since March 2010, Denise Madera, a spokeswoman for the company in The Woodlands, Texas, said.

Deliveries started Jan. 6 and have totaled 565,976 dekatherms over four days, according to Ventyx. The Excelerate port, about 13 miles offshore in Massachusetts Bay, delivers gas to the Algonquin line.

“New England futures were trading in the $19 to $22 range for this winter,” Margolin said. “In the global market, that appears to be the best LNG supplies can get.”