Tropical Storm Francine formed Monday in the Gulf of Mexico and was expected to become a hurricane before reaching the Louisiana and upper Texas coastlines on Wednesday.
The storm’s tentative path puts it on course to potentially impact a number of existing LNG facilities in Louisiana, including the Calcasieu Pass, Cameron and Sabine Pass terminals, as well as the Freeport plant in Texas.
The National Hurricane Center (NHC) said hurricane conditions are possible in the region by Wednesday afternoon. NHC issued a hurricane watch Monday for parts of the Louisiana coast, specifically from Cameron eastward to Grand Isle. NHC warned that the storm could bring high winds, heavy rainfall, flooding and storm surge.
U.S. natural gas prices fell Monday as hurricane fears trumped pockets of strong cooling demand, lower production readings and recent spot price strengthening. The storm could cut into natural gas demand after Henry Hub hit a two-week high last Friday. Liquefied natural gas loadings could also be disrupted.
While they remained open Monday, the U.S. Coast Guard (USCG) issued warnings for the ports of Lake Charles, Sabine and Freeport, which serve all the terminals in the storm’s path. Voluntary evacuations were issued in other areas as tropical force winds were expected within 72 hours.
“Continued uncertainty on the impact of the track may result in decreased preparation time once the path of the storm becomes more defined,” the USCG said.
Feed gas nominations were in line with last week’s levels on Monday at about 13.5 Bcf, according to NGI data.
The 2024 Atlantic hurricane season, which runs from June to November, has produced five storms so far. Three of those became hurricanes.
Former Hurricane Beryl made landfall in July and damaged the Freeport terminal, which was offline for about two weeks until it was able to slowly ramp back up.
Global Natural Gas Prices Stable
Lingering uncertainty over the storm’s path and its impact on global gas supplies had prices in both Europe and Asia stable Monday.
In Europe, the Title Transfer Facility gained 2% and remained near $12/MMBtu. Demand has been sluggish on the continent, with LNG send-out falling by 5% over the weekend from a week earlier.
Natural gas prices dropped in Europe and Asia last week as the market discounted risks following a strong August in which supply disruptions and geopolitical tensions helped support them.
European storage inventories are at 93% of capacity and above the 86% five-year average for this time of year.
Norwegian gas flows to the continent have strengthened slightly to about 6.5 Bcf/d, but remain below peak levels of 12 Bcf/d as unplanned and planned maintenance continues. Some of the work, which started late last month, is expected to end later this week.
The weather-related supply risks in the United States and colder temperatures in Europe helped sustain prices there on Monday. Cold weather is forecast this week for Germany, France, Northern Spain, Italy and the British Isles.
“With winter approaching, the temperature-related demand risk will add to the risks on supply,” Engie EnergyScan said in a note to clients on Monday. “The factoring of these risks mainly explains the current price rebound. However, given the still comfortable level of European Union gas stocks, the rebound should be limited.”
In Asia, the Japan-Korea Marker (JKM) held near $13 on Monday after dipping below the $14 mark early last week.
The market has shrugged off outages in the region. Output from Train 1 at the Ichthys LNG plant in Australia was falling amid repair work as the week got underway. Train 2 was taken offline last month after a gas leak and isn’t expected to be restarted until October.
Oil-linked prices continue to fall as well and remain below JKM as Brent crude slides. OPEC and its allies last week delayed a planned oil output increase by two months until December amid falling crude prices.
Elsewhere in the region, Bloomberg reported Monday that China’s natural gas storage inventories are brimming, which could ultimately cut into LNG imports if the winter proves to be mild.
In other news last week, Egyptian General Petroleum Corp. issued a tender for 17 cargoes for delivery from October to December. It was the country’s first winter gas tender in years as it grapples with a domestic supply shortage and could further tighten the market.
Meanwhile, in the United States, Venture Global LNG Inc. received approval from federal regulators to introduce hazardous fluids to a storage tank at its Plaquemines LNG project in Louisiana. The facility is in the final stages of starting up.
A loaded LNG tanker has been berthed at the terminal since late last month. The cargo would be used to cool down equipment at the facility during startup. Management has said it expects to start loading LNG later this year from the first phase of the 20 million metric tons/year (mmty) project.
Startup operations are also continuing at LNG Canada in Kitimat, British Columbia. The project said low-level flaring started after natural gas was recently introduced. A small amount of gas is now flowing to the facility on the Coastal GasLink pipeline.
The first phase of the project is expected to start shipping cargoes in the middle of next year.
In the Middle East, Abu Dhabi National Oil Co. said last week it has agreed to supply Indian Oil Corp. Ltd. with 1 mmty of LNG for 15 years from its Ruwais LNG project, which was sanctioned in June. The 9.6 mmty project is expected to enter service in 2028.
Santos Ltd., which operates or has interests in the Darwin, Gladstone and Papua New Guinea LNG plants, also agreed to supply an affiliate of Glencore plc with 19 LNG cargoes starting in the 4Q2025.
Santos said it would supply the 0.5 mmty of LNG from its global portfolio of assets.
