U.S. natural gas prices slump after fire at Texas LNG terminal

Christine Buurma and Gerson Freitas Jr., 

Bloomberg News 

Jun 8, 2022

U.S. natural gas prices tumbled after a fire broke out at a Texas export terminal, threatening to leave supplies of the fuel stranded in shale basins despite surging overseas demand.

The fire is under control at Freeport LNG’s terminal in Quintana, Texas, about 65 miles (105 kilometers) south of Houston, company spokeswoman Heather Browne said Wednesday. The incident happened at about 11:40 a.m. local time and an investigation is ongoing, she said, adding that there were no injuries or risks to the surrounding community.

Freeport is one of seven US liquefied natural gas export terminals, which receive gas via pipeline and liquefy it before loading the super-chilled LNG onto tankers. The terminals have helped the US emerge in the past few years to vie with Qatar and Australia for position as the No. 1 exporter of LNG. As Europe clamors for cargoes after Russia’s invasion of Ukraine, the blaze could have a significant impact on global supplies of the fuel.

US natural gas futures for July delivery slid as much as 9.3 per cent to US$8.427 per million British thermal units in New York after reports of the fire first emerged, halting a rally that sent prices to fresh 13-year highs earlier. The contract settled down 6.4 per cent at US$8.699. Prices have more than doubled this year, as US gas stockpiles remain well below normal levels.

The fire is “going to curtail exports and alleviate some of the strain on US supplies,” said John Kilduff, a partner at hedge fund Again Capital in New York. US consumers “should benefit from lower prices, but Europe and Asia will probably pay higher prices.”

Freeport receives about 2 billion cubic feet of gas per day, or roughly 16 per cent of total US LNG export capacity. The tanker Elisa Larus is currently at the terminal, though it’s under way using its engine, according to vessel tracking data compiled by Bloomberg. That suggests the tanker may be moving away from Freeport. 

 

Natural Gas Prices Tank Again As Freeport LNG Remains Shut For Almost A Month

By Irina Slav - Jun 09, 2022

• Natural gas prices fell another 7.5% percent on Thursday morning.
• Freeport LNG outage to lead to drop in exports to Europe and Asia.
• The cause of the explosion on Wednesday remains unclear.

Amid robust demand for U.S. LNG, one of the biggest liquefaction facilities on the Gulf Coast, Freeport LNG, will be out of commission for at least three weeks following an explosion yesterday.

An explosion rocked the Freeport LNG liquefaction plant yesterday morning, with its cause as of yet unclear. An investigation is ongoing, but according to the operator of the facility, Freeport LNG, the facility will remain shut down for weeks. It accounts for a fifth of total U.S. liquefaction capacity.

The Freeport facility has three liquefaction trains, and a fourth is being constructed. Its current gas processing capacity is 2.1 billion cu ft daily. With the outage, the situation with U.S. LNG exports will become problematic, as evidenced by the gas market’s reaction to the news of the explosion.

Initially, prices fell as traders worried that the outage would reduce American LNG’s market share, per a Financial Times report from earlier today. Bloomberg noted that the fire means a lot of gas will remain stranded at the fields amid surging demand for gas overseas.

Yet prices on international LNG markets might react differently because the Freeport LNG outage effectively means there will be less natural gas for export, especially to energy-thirty Europe and Asia.

In Europe, gas prices have been on the decline for the past few days as an early start of summer reduced immediate demand. An ample supply of LNG has also contributed to the price trend. With the outage, this trend might at some point reverse.

Asian demand, however, is on a strong rise as buyers seek to build inventory for the winter season, Bloomberg reported this week, which is lending further upward support to prices.

“LNG prices remain well above where they normally are, even adjusting for higher crude oil prices,” Sanford C. Bernstein analysts said in a note, as quoted by Bloomberg. “We expect this to be a lull before what looks like a tough winter ahead for consumers.”

Oilprice.com

European Gas Soars as Fire in US Compounds Russia Supply Concern

Elena Mazneva and Anna Shiryaevskaya, Bloomberg News

BC-European-Gas-Soars-as-Fire-in-US-Compounds-Russia-Supply-Concern , Elena Mazneva and Anna Shiryaevskaya

(Bloomberg) -- Europe’s natural gas prices surged after a fire at a large export terminal in the US promised to wipe out deliveries to a market that’s on high alert over tight Russian supplies.

Benchmark futures traded in Amsterdam snapped a six-day falling streak, while UK prices jumped more than 34%. The Freeport liquefied natural gas facility in Texas, which makes up about a fifth of all US exports of the fuel, will remain closed for at least three weeks. The US sent nearly 75% of all its LNG to Europe in the first four months of this year.

The closure comes as pipeline supplies from Europe’s top providers are also capped. Key facilities in Norway are undergoing annual maintenance this week, while Russia’s supplies are below capacity after several European buyers were cut off for refusing to meet Moscow’s demands to be ultimately paid in rubles for its pipeline fuel. 

“An export halt during the high demand winter months would have triggered a much bigger reaction, but the event highlights Europe’s precarious situation and it would likely signal an end for now to the calm trading seen in recent weeks,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Europe has been particularly reliant on US LNG to help offset risk of disruption to Russian pipeline imports, and ample supplies of the fuel in the past weeks had calmed the market after wild swings earlier this year. 

“The rising importance of US gas exports to a gas-hungry Europe has been clearly highlighted by price movements on either side of the pond these past few hours,” Saxo Bank’s Hansen said.

The extent of the damage to the Freeport facility is not yet clear, but the fire could potentially knock out abut 16% of total US LNG export capacity “for an unknown period if the fire damage proves difficult to repair,” analysts at Evercore ISI said in a note. 

Dutch front-month gas, the European benchmark, traded 12% higher at 89.13 euros per megawatt-hour by 8:53 a.m. in Amsterdam. The contract dropped 16% over the previous six sessions. 

UK next-month futures jumped to 174.14 pence a therm. Send-outs from Britain’s LNG terminals, a key European destination for US cargoes, fell about 30% Thursday to the lowest since mid-March. 

Even with tepid consumption in most of Europe amid mild weather that means that energy companies may have to turn to gas inventories just as storage levels have improved recently, getting closer to historic averages. 

LNG buyers will probably start hunting for replacement shipments from the spot market, but there is a dwindling amount of supplies available, according to traders in Asia. The move is likely to boost already intense competition between Asia and Europe for the fuel. 

Gas flows from Norway rebounded after a one-day halt of the giant Troll field for annual tests on Wednesday, but are still below normal as seasonal works at a number of facilities continue. Shipments of Russian gas via the Nord Stream pipeline to Germany will continue to edge down on Thursday, grid data show.

©2022 Bloomberg L.P.

US LNG project approvals on track for record new volumes


Fri, June 23, 2023 
By Scott DiSavino

NEW YORK, June 23 (Reuters) - U.S. liquefied natural gas (LNG) developers are on track to approve three export projects capable of processing 5.1 billion cubic feet per day (bcfd) of gas in the first half of the year, a record volume for new LNG projects in any year.

The U.S. became the world's largest LNG producer by installed capacity in 2022 driven by the boom in LNG plant construction and a decade of surging shale gas discoveries. U.S. LNG exports are poised to reach 12.1 bcfd this year and 12.7 bcfd next year.

The latest approvals are chipping away at a backlog of projects pursuing financial support and customers willing to sign long-term contracts. Analysts say demand for the fuel will keep the flow of approvals coming this year.

"We expect global LNG demand to grow from 399 million tonnes in 2022 to 627 million tonnes by 2035, more than a 50% increase," said Michael Stoppard, global gas strategy lead at data provider S&P Global Commodity Insights.

U.S. LNG developers this year have already approved the construction of two projects: the second 1.2-bcfd phase of Venture Global LNG's Plaquemines in Louisiana and Sempra Energy's 1.8-bcfd Port Arthur in Texas.

NextDecade Corp said it expects to greenlight the first 2.1-bcfd phase of its Rio Grande LNG project in Brownsville, Texas by month's end. First production could take place in 2027, it said.

MOST VOLUMES

The final investment decisions (FID) allow the companies to start major construction after signing construction and financing agreements. New plants generally take from three to five years to produce their first LNG.

The combined 5.1 bcfd of gas is the most U.S. approved volumes in one year since 2014, when three projects capable of processing 4.9 bcfd won financial go-aheads. The seven U.S. export plants now operating can turn about 13.8 bcfd of gas into LNG.

Several other LNG export projects hope to land enough customers to secure go-aheads this year - some have been in development for years.

Analysts have said two of the front-runners are the first 0.4-bcfd phase of Delfin Midstream's offshore Louisiana project and the first 1.3-bcfd phase of Venture Global's Calcasieu Pass 2 (CP2) project in Louisiana.

There are four U.S. LNG plants under construction: the QatarEnergy and Exxon Mobil Corp 2.4-bcfd Golden Pass joint venture in Texas, Venture Global's 2.9-bcfd Plaquemines, Cheniere Energy Inc's 1.5-bcfd Corpus Christi LNG expansion and Sempra's Port Arthur.

As those four enter service from 2024-2028, U.S. LNG export capacity will rise to 15.3 bcfd next year to 22.3 bcfd in 2028.

Current LNG capacity is 10.1 bcfd in Qatar and 11.5 bcfd in Australia. That is on track to rise to about 14.3 bcfd in Qatar with the North Field expansion around 2025 and about 12.2 bcfd in Australia with the Pluto expansion around 2026.

(Reporting by Scott DiSavino in New York and Marwa Rashad in London; Editing by Conor Humphries)

Explainer: What's behind the wild surges in global LNG prices and the risks ahead

By Jessica Jaganathan

A liquified natural gas (LNG) tanker leaves the dock after discharge at PetroChina's receiving terminal in Dalian, Liaoning province, China July 16, 2018. REUTERS/Chen Aizhu/File Photo

Summary

Asian LNG prices surge from below $2/mmBtu to above $34/mmBtu

European gas storage at low levels, fuelling restocking efforts

Maintenance at LNG plants prolonged and delayed due to COVID

SINGAPORE, Oct 1 (Reuters) - In less than a year and a half, liquefied natural gas (LNG) prices have lurched from record lows to record highs, with the market first reeling from the impact of the pandemic and now unable to keep up with a global recovery in demand.

Demand jumped on economic growth plus a cold northern hemisphere winter followed by a hot summer, while supplies have been stymied by production problems. Recent power curbs and outages across China due to coal shortages have only exacerbated competition between Asia and Europe in securing sources of energy.

That's led to LNG prices hitting $34 per million British thermal units this week compared with just under $2 mmBtu in May 2020, while European gas prices have catapulted 300% higher this year.

Key LNG prices

HOW BAD IS THE SUPPLY-DEMAND MISMATCH?

Gas inventories remain critically tight in Europe and Asia which together account for 94% of global LNG imports and over a third of global gas consumption.

Most major LNG producers are operating at or close to full capacity and have allocated the vast majority of their shipments to specific customers, leaving little prospect of a short-term fix.

According to the International Gas Union, only 8.9 million tonnes per annum (mtpa) of a total 139.1 mtpa of planned new liquefaction capacity is expected to come online in 2021.

Some of that additional capacity has been delayed by COVID-19 movement restrictions that have stopped or dragged out construction and maintenance work at several key sites including in Indonesia and Russia over the past year.

So far this year, 288.1 million tonnes of LNG has loaded for exports globally, just 7% growth over the same period last year, Refinitiv data shows.

WHAT ARE THE RISKS AHEAD?

Buyers may struggle to buy enough gas for restocking and use. Less wind in Europe lately has boosted gas usage by power stations there, while in China power is being rationed to industry and some residential users, triggering a jump in LNG imports.


Current long-range forecasts call for a mild winter in much of Asia this year, but the market fears a repeat of the 2020/21 cold snap could lead to a buying binge similar to the one in January that fired up prices.

"At the extreme, it would not be a surprise if some gas or LNG cargoes could even change hands in the $100/MMBtu range, or ~$580/bbl in oil-equivalent terms, based on observing how prices have spiked in the U.S. gas market, for example, over the past ten years," Citi said in a note to clients last week.

HOW DID WE GET HERE?

Spot LNG fell to a record low of $1.85/mmBtu in May 2020, when coronavirus containment measures snuffed out power demand just as new supplies from major producers including Qatar, Australia and the United States flowed onto the market.

Global LNG exports

LNG producers slashed production, reducing shipments through the 2020 summer which have had a lasting impact on global gas inventories. The 2020/21 winter freeze then caught many power providers short, sparking a surge in spot demand and tightening gas stockpiles further just as logistics constraints slowed delivery times.

Those factors and high shipping rates sent LNG spot prices rocketing to a record $32.50 per mmBtu in mid-January, though prices returned below $10 by the end of the month.

Prices have since bounced back. European buyers struggled to rebuild stocks, with a hot summer boosting air conditioner use just as high carbon prices forced power generators to cut coal use and burn more gas. Gas field maintenance in Norway and lower volumes from Russia also cut supplies.

Higher purchases by Asia on growth in Chinese demand and stock rebuilding exacerbated Europe's shortfall, resulting in Europe-bound shipments through August sliding 18% from the same period in 2020, Refinitiv data shows.

Europe LNG imports

That left Europe's gas inventories at 50-60% full by late summer, compared to 80% in the same period last year. The current re-stocking wave is now fuelling Europe's surge in gas prices.

WILL SUPPLIES BE FORTHCOMING?

Apart from COVID-19-related project delays, the global energy sector pivot away from fossil fuels towards greener energy supplies has slowed investment in LNG infrastructure. That has hindered the ability of producers to quickly deliver more supply to market, said Charif Souki, co-founder of U.S natural gas company Tellurian (TELL.O).

"The world was kind of lulled to complacency because prices were low for five years so no one felt an urge to plan and everyone got very religious on environmental protection and it is wonderful – we should be – but we should look at what things actually work rather than simply what we hope for," he added.

Russia’s Answer To The U.S. Shale Boom Takes A Huge Step Forward

By Simon Watkins - Aug 28, 2023

• Russia's flagship Arctic LNG 2 will begin operations before the end of this year.
• 
  
• Russia's Arctic sector comprises over 35,700 billion cubic metres (bcm) of natural gas and over 2,300 million metric tons of oil and condensate.
• 
  
• The key market into which much of this Arctic gas and oil output will flow will be China.

Despite multi-layered international sanctions on Russia following its 24 February 2022 invasion of Ukraine, President Vladimir Putin’s ‘special energy project’ – developing the country’s massive gas and oil resources in the Arctic – took a major step forward last week as it was confirmed that the flagship Arctic LNG 2 will begin operations before the end of this year. Over and above the significance of Russia being able to complete such a financially and technologically challenging project despite swingeing sanctions in place against it, Arctic LNG 2 is of vital importance to Russia for several wider reasons. Given the scale and scope of Russia’s broader plans for the Arctic, it is also vitally important to the U.S. and its allies how Russia proceeds there.

One reason why the Arctic is so important to Putin is the sheer size of its gas and oil reserves, much of them in Russian territory. According to various Russian authorities, the country’s Arctic sector comprises over 35,700 billion cubic metres (bcm) of natural gas and over 2,300 million metric tons of oil and condensate, the majority of which are in the Yamal and Gydan peninsulas, lying on the south side of the Kara Sea. These may well be underestimates, according to a senior source in the European Union energy security complex exclusively spoken to by OilPrice.com recently. Within this, Putin has long believed that Russia’s presence in the global liquefied natural gas (LNG) market does not reflect its enormous presence in the broader world gas and oil markets, and that the perfect foundation stone for this to be addressed is the Arctic LNG projects, as analysed in full in my new book on the new global oil market order. According to comments from Putin, the next 10 years or so will witness a dramatic expansion in the extraction of these Arctic resources, and a corollary build-out of the Northern Sea Route (NSR) as the primary transport route to monetise these resources in the global oil and gas markets.

The key market into which much of this Arctic gas and oil output will flow will be China - the second reason why the region is so important to Putin. Over the past 30 years, there has been a complete switch in the power relationship between the two former great Communist powers, with China now being the more dominant partner. Crucially, though, for Russia, it still holds some power with China in the matter of its gas and oil flows to the country. These flows mean that Moscow can continue to count on the military and political force-multiplier effect of Beijing as a major presence in the Asia Pacific theatre of potential conflict, if not directly in the European one. Given Russia’s poor performance in the Ukraine war to date, this force multiplier effect of its relationship with China has never been more important to it. In precisely this vein, around the same time as the invasion of Ukraine, Russian state gas giant Gazprom signed a deal to supply 10 bcm per year (bcm/y) of gas to the China National Petroleum Corporation (CNPC). This built on another 30-year deal between the two companies signed in 2014 for 38 bcm/y and this in turn was a part of, but significantly bolstered, the ‘Power of Siberia’ pipeline project – managed on the Russian side by Gazprom and on the China side by CNPC – that was launched in December 2019. 

The third reason why the Arctic LNG projects are so important to Putin is that LNG is the world’s emergency gas form, as was dramatically highlighted again most recently in the aftermath of Russia’s invasion of Ukraine, as also analysed in full in my new book on the new global oil market order. Unlike gas supplies delivered through pipelines, LNG does not require years of laying pipelines and building out corollary supportive infrastructure. It also does not require extensive, time-consuming negotiations over complex contracts. Instead, it can be picked up quickly in the spot market and shipped expeditiously to wherever it is required. With the world increasingly needing LNG supplies, given the spike in demand for them in Europe after flows from Russia’s gas pipelines stalled, Putin knows that increasing Russia’s own LNG supply capabilities has never been more geopolitically important to it. The importance that Russia is placing on being able to move LNG quickly to its key target markets of China, and in Asia more broadly, is underlined by the fact that it has pushed hard with the build-out of its trans-shipment LNG facility on the Russian Far East coast in Kamchatka and its Northern Sea Route as well.

A final key reason at play in Russia’s Arctic gas and oil drive is its capacity to subvert the U.S. dollar-based hegemony in the energy market, as also analysed in my new book, particularly as it features one of the world’s biggest oil and gas producers and one of its biggest buyers. Very early in the Arctic LNG projects’ history, Novatek’s chief executive officer, Leonid Mikhleson, said that future sales to China denominated in renminbi were under consideration. This was in line with his comments on the prospect of further U.S. sanctions - following Russia’s annexation of Crimea in 2014 - that they would only accelerate the process of Russia trying to switch away from U.S. dollar-centric oil and gas trading. “This has been discussed for a while with Russia’s largest trading partners such as India and China, and even Arab countries are starting to think about it... If they do create difficulties for our Russian banks then all we have to do is replace dollars,” he said. Such a strategy was tested in 2014, when the state-run Gazprom Neft tried trading of cargoes of crude oil in Chinese yuan and roubles with China and Europe, to reduce Russia’s dependence on crude trading in dollars, in response to the initial Western sanctions against Russia’s energy sector. 

Putin’s determination to push ahead with the Arctic LNG projects was truly seen after Russia’s 2014 annexation of Ukraine’s Crimea region. Moscow not only initially bankrolled the US$27 billion flagship Arctic LNG project in the Yamal Peninsula from the beginning with money directly from the state budget but also later in 2014 – after the U.S. had imposed sanctions on Russia over Crimea - supported it again by selling bonds in Yamal LNG (the program began on 24 November 2015, with a RUB75 billion 15-year issue). It further provided RUB150 billion of additional backstop funding from the National Welfare Fund. After that, April 2016 saw two Chinese state banks agree to provide US$12 billion to the Yamal LNG project in euros and roubles. The project was further helped by a tumble in the rouble in late 2014 that effectively cut the cost of Russian-sourced equipment and labour at a key moment in the construction.

As it now stands, according to comments from China National Offshore Oil Corporation (CNOOC) – which holds a 10 percent stake in the three-train 19.8 million metric tonnes per year (mt/y) Arctic LNG 2 project - the first 6.6 million mt/y train will start up before the end of this year. This follows its recent installation on the foundation in the seabed at the Utrenniy terminal on the Gydan Peninsula. Additionally, according to CNOOC, all the other stakeholders – Novatek 60 percent, and 10 percent each for CNPC, France’s TotalEnergies, and a consortium of Japan's Mitsui and Jogmec – have continued to pay the funding required on schedule. The start-up of the first train of Arctic 2 LNG is in line with Novatek’s plans to build out its LNG export capacity up to 70 million mt/y by 2030, including the 19.8 million mt/y Arctic LNG 2. In turn, this dovetails into Russia’s plans for LNG production of 80-140 million mtpa by 2035, which would be greater than that of LNG powerhouses Qatar and Australia. 

By Simon Watkins for Oilprice.com

The Companies Taking Advantage Of America’s LNG Boom

By Alex Kimani - Jul 21, 2022, 

• While oil pipeline capacity in the U.S. currently exceeds production, the country’s booming LNG and natural gas markets mean demand for infrastructure is soaring.
• The United States is projected to become the world’s largest exporter of LNG this year, and new LNG terminals and natural gas pipelines will be needed to continue this growth.
• Nearly all midstream companies in the U.S. are racing to take advantage of this opportunity, with new projects coming online and final investment decisions being made.

Over the past few years, dozens of U.S. midstream companies have set their sights on natural gas pipelines and export terminals as the U.S. natural gas and LNG markets explode while crude oil pipeline capacity continues to exceed production.

Natural gas projects are expected to be the fastest growing pipeline sector as production rises and shippers find new customers in Europe and Asia. Now, as analysts tell Reuters, it's all about boosting U.S. capacity and adding new pipelines to transport natural gas to LNG export terminals. 

"Everybody has pretty much given up on ever doing another long-haul pipeline anywhere outside of Texas and, maybe, Louisiana," Bradley Olsen, lead portfolio manager for Recurrent Investment Advisors' midstream infrastructure strategy, has told Reuters.

Europe's natural gas demand has skyrocketed as the EU tries to lower its reliance on Russian natural gas following its invasion of Ukraine. Europe has displaced Asia as the top destination for U.S. LNG, and now receives 65% of total exports. The EU has pledged to reduce its consumption of Russian natural gas by nearly two-thirds before the year's end, while Lithuania, Latvia, and Estonia have vowed to eliminate Russian gas imports outright.

The European gas crisis has only deepened after Russia cut off the gas supply to Poland and Bulgaria, ostensibly for failing to pay for gas in roubles, sending European gas prices soaring. The move marks a ratcheting up of tensions and could reduce supplies to Europe, as many pipelines pass through Poland en route to the rest of the continent. Adding to supply woes, Russia's Nord Stream 1 pipeline that supplies Germany has gone offline for scheduled maintenance. While it partially resumed operations on July 21st, Europe feared that it could be delayed for political leverage. 

Not surprisingly, Europe has become the top importer of U.S. LNG, taking about 65% of U.S. exports. 

The U.S. Energy Information Administration (EIA) has forecast that the United States will surpass Australia and Qatar to become the world's top LNG exporter this year, with LNG exports continuing to lead the growth in U.S. natural gas exports and average 12.2 billion cubic feet per day (Bcf/d) in 2022. The United States currently ranks second in the world in natural gas exports, behind only Russia.

According to the EIA, annual U.S. LNG exports are set to increase by 2.4 Bcf/d in 2022 and 0.5 Bcf/d in 2023. The energy watchdog has forecast that natural gas exports by pipeline to Mexico and Canada will increase slightly, by 0.3 Bcf/d in 2022 and by 0.4 Bcf/d in 2023, thanks to more exports to Mexico. 

In contrast to natural gas, crude oil pipeline capacity continues to far exceed production. Currently, there are ~8 million barrels per day of Permian crude pipeline capacity, significantly more than the 5.5 million bpd of production, according to EIA and Morningstar figures.

Natural Gas and LNG Projects

The pivotal Permian Basin is preparing to unleash a torrent of gas and gas projects to meet exploding LNG and natural gas demand - coming just in time, given that limited takeaway capacity is expected to start being keenly felt in 2023, which could lead to negative pricing in the basin.

Energy Transfer LP (NYSE: ET) is looking to build the next large pipeline to transport natural gas production from the Permian Basin. Energy Transfer has also started building the Gulf Run pipeline in Louisiana to move gas from the Haynesville Shale in Texas, Arkansas, and Louisiana to the Gulf Coast.

Energy Transfer is expected to report Q2 earnings on 3rd August 2022. The consensus EPS forecast for the quarter, based on five analysts as per Zacks Investment Research, is $0.28 compared to $0.20 for last year's corresponding period.

Back in May, a consortium of oil and natural gas firms, namely WhiteWater Midstream LLC, EnLink Midstream (NYSE:ENLC), Devon Energy Corp. (NYSE: DVN), and MPLX LP (NYSE: MPlX) announced that they had reached a final investment decision (FID) to move forward with the construction of the Matterhorn Express Pipeline after having secured sufficient firm transportation agreements with shippers.

According to the press release, "The Matterhorn Express Pipeline has been designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas through approximately 490 miles of 42-inch pipeline from Waha, Texas, to the Katy area near Houston, Texas. Supply for the Matterhorn Express Pipeline will be sourced from multiple upstream connections in the Permian Basin, including direct connections to processing facilities in the Midland Basin through an approximately 75-mile lateral, as well as a direct connection to the 3.2 Bcf/d Agua Blanca Pipeline, a joint venture between WhiteWater and MPLX."

Matterhorn is expected to be in service in the second half of 2024, pending regulatory approvals. 

WhiteWater CEO Christer Rundlof touted the company's partnership with the three pipeline companies in developing "incremental gas transportation out of the Permian Basin as production continues to grow in West Texas." Rundlof says Matterhorn will provide "premium market access with superior flexibility for Permian Basin shippers while playing a critical role in minimizing flared volumes."

Matterhorn joins a growing list of pipeline projects designed to capture growing volumes of Permian supply to send to downstream markets. 

Early this month, WhiteWater revealed plans to expand the Whistler Pipeline's capacity by about 0.5 Bcf/d, to 2.5 Bcf/d, with three new compressor stations.

Source: Natural Gas Intelligence

Although the companies have not divulged the cost and revenue estimates of the Matterhorn, a project of that magnitude is likely to provide years of predictable cash flows to these producers--which, incidentally, are all high-dividend payers.

Oklahoma-based Devon, one of the Permian's top producers, recently said it expects Permian production to reach nearly 600,000 boe/d in the second quarter. The new pipeline will help support the company as it increases its production in the Permian in the coming years. DVN stock currently yields (Fwd) 7.3% and has returned 54.3% year-to-date.

MPLX has several other expansion projects under construction. The company says it expects to finish construction on two processing plants this year, and recently reached a final investment decision to expand its Whistler Pipeline. MPLX stock yields a juicy 9.2% (Fwd), but the stock has only managed a 2.1% YTD return.

Devon Energy is expected to report Q2 2022 earnings on 1st August 2022. The company is expected to report EPS of $2.29, good for 281.67% Y/Y growth. Enlink will report on 3rd August 2022 with consensus EPS being $0.06 vs. $-0.04 for last year's comparable quarter, while MPLX LP is expected to do so on 2nd August, 2022, whereby it has a consensus EPS of $0.82 compared to $0.66 a year ago.

Meanwhile, EnLink's cash flow has been rising thanks to higher commodity prices. The company has increased its capex range from $230 million-$$260 million up to $280 million-$310 million, which should drive growth in the near-term. 

Back in May, Kinder Morgan Inc. (NYSE: KMI) subsidiary launched an open season to gauge shipper interest in expanding the 2.0 Bcf/d Gulf Coast Express Pipeline (GCX).

Meanwhile, KMI has already completed a binding open season for the Permian Highway Pipeline (PHP), with a foundation shipper already in place for half of the planned 650 MMcf/d expansion capacity.

On Wednesday, KMI reported Q2 Non-GAAP EPS of $0.27, beating by $0.01; GAAP EPS of $0.28 was in-line while revenue of $5.15B (+63.5% Y/Y) beat by $1.34B. 

For the full FY 2022, KMI expects to generate net income of $2.5B and declare dividends of $1.11 per share, a 3% increase from the 2021 declared dividends. 

In the LNG space, in May, the U.S. Department of Energy authorized additional LNG exports from the planned Golden Pass LNG Terminal in Texas and Magnolia LNG Terminal in Louisiana as the U.S. seeks to boost LNG exports to Europe.

Jointly owned by Exxon Mobil (NYSE: XOM) and Qatar Petroleum, the $10B Golden Pass LNG export project is expected to become operational in 2024, while Magnolia LNG, owned by Glenfarne Group, will come online by 2026. The two terminals are expected to produce more than 3B cf/day of natural gas, although Magnolia is yet to sign contracts with customers. 

Previously, American LNG developers were unwilling to construct self-financed liquefaction facilities that are not secured by long-term contracts from European countries. However, the Ukraine war has exposed Europe's soft underbelly and the harsh reality is forcing a rethink of their energy systems. To wit, Germany, Finland, Latvia, and Estonia recently expressed the desire to move forward with new LNG import terminals.

Exxon is slated to report Q2 earnings on 29th July whereby the United States' largest independent oil company is expected to post EPS of $3.41 per share, reflecting a year-over-year increase of 210%.

In May, the DoE approved expanded permits for Cheniere Energy's (NYSE: LNG) Sabine Pass terminal in Louisiana and its Corpus Christi plant in Texas. The approvals allow the terminals to export the equivalent of 0.72 billion cubic feet of LNG per day to any country with which the United States does not have a free trade agreement, including all of Europe. Cheniere says the facilities already are making more gas than is covered by previous export permits.

Cheniere is expected to report Q2 earnings on 4th August, with EPS expected to clock in at  $2.76, good for a 411.11% Y/Y increase.

By Alex Kimani for Oilprice.com