As energy markets brace for an October shutdown at a Warren Buffett-owned LNG export terminal, LNG stocks continue to show constructive action against a receding market.
U.S. natural gas futures eased to around $7.70 per million British thermal units Tuesday. Natural gas prices have pulled back after spiking to 14-year highs in August amid continued fears of an energy crisis in Europe.
The Maryland-based Cove Point LNG export plant is set to shut down for almost two weeks of scheduled maintenance in early October. During those days, it along with Freeport LNG's Quintana, Texas, export terminal will both be offline.
This is expected to cause a temporary bottleneck in U.S. natural gas supplies, cutting exports and modestly increasing U.S. storage levels.
LNG Plant Shutdowns
The Cove Point LNG terminal has a storage capacity of 14.6 billion cubic feet per day (bcf/d). Its daily export capacity is 1.8 bcf/d, a bit less than 14% of total U.S. LNG export capacity. The facility has shipped liquefied natural gas to 28 nations, including several countries in Europe, in the past several months.
Buffett's Berkshire Hathaway fully operates Cove Point LNG and owns 25% of it through holding company Berkshire Hathaway Energy. BKRA shares ownership of the export plant with Dominion Energy (50%) and Brookfield Asset Management (25%).
U.S. gas exports had already been reduced for months since an outage at the Freeport LNG export plant has left more gas for utilities to inject into stockpiles for next winter.
Freeport LNG's Quintana, Texas, export plant has been offline since a June 8 fire. Freeport said in August it anticipates partial operations to resume at the export terminal in early November, vs. earlier estimates for October. The facility aims to ramp up to a sustained level of at least 2 bcf/d — about 15% of total U.S. LNG export capacity — by the end of November.
Full capacity is not expected to return until March 2023.
LNG Stocks
LNG stocks have generally held up well during the current uncertain market environment. Leading liquefied natural gas producer Cheniere Energy has climbed more than 25% since the end of July, but edged down 0.3% during Tuesday's market trading.
LNG transport and processor Golar LNG popped 22% in August but dropped 1.5% on Tuesday, holding support at its 50-day moving average. Flex LNG also pulled back to test support; it was down 1.6% Tuesday after rallying 26% since May.
Meanwhile, LNG stock New Fortress Energy has pulled back more sharply, dropping below its 50-day moving average. Shares have dropped 22% since an Aug. 25 high of 63.06, but remain up 23% since the end of June.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
