As energy markets brace for an October shutdown at an LNG export terminal owned by Warren Buffett, LNG stocks continue to show constructive action against a declining market.
US natural gas futures eased Tuesday to about $7.70 per million UK thermal units. Natural gas prices have fallen from a 14-year peak in August amid lingering fears of an energy crisis in Europe.
The Maryland-based LNG export plant at Cove Point will be shut down in early October for nearly two weeks of scheduled maintenance. In those days, it will both be offline along with Freeport LNG’s export terminal in Quintana, Texas.
This is expected to create a temporary bottleneck in the US natural gas supply, causing exports to decline and US storage levels to modestly increase.
Shutdown of LNG factories
The Cove Point LNG terminal has a storage capacity of 14.6 billion cubic feet per day (bcf/d). Daily export capacity is 1.8 bcf/d, just under 14% of total US LNG export capacity. The facility has shipped liquefied natural gas to 28 countries in recent months, including several countries in Europe.
buffett’s Berkshire Hathaway (BKRA) wholly exploits Cove Point LNG and owns 25% of it through holding company Berkshire Hathaway Energy. BKRA shares ownership of the export factory with Dominion Energy (D) (50%) and Brookfield Asset Management (BAM) (25%).
US gas exports had been cut for months since a breakdown at the Freeport LNG export plant left more gas for utilities to inject into stockpiles for next winter.
The Freeport LNG export plant in Quintana, Texas, has been offline since a June 8 fire. Freeport said in August it expects partial operations at the export terminal to resume in early November, compared to previous estimates for October. The facility aims to ramp up to sustainable levels of at least 2 bcf/d – approximately 15% of total US LNG export capacity – by the end of November.
Full capacity is not expected to return until March 2023.
LNG stocks have generally held up well in the current uncertain market environment. Leading Liquefied Natural Gas Producer Cheniere Energy (LNG) is up more than 25% since the end of July, but fell 0.2% in Tuesday’s trading.
LNG transport and processor Golar LNG (GLNG) rose 22% in August but fell 0.9% Tuesday, with support remaining at the 50-day moving average. flex LNG (FLNG) also withdrew to test support; it fell 1.2% on Tuesday after a 26% rally since May.
Meanwhile, LNG stock New fortress energy (NFE) has pulled out more sharply, falling below the 50-day moving average. Shares are down 22% since an August 25 high at 63.06, but are up 23% since the end of June.
Follow Kit Norton on Twitter @KitNorton for more coverage.
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