American Oil and Gas Reporter - August 2017 - 40

SpecialReport: Industry In Motion
7
6

Crude Oil
Motor
Gasoline

MMbbl/d

5
4

Propane
Distillate
Fuel

3
2

Other
Petroleum
Products

1
0
2010

2011

2012

2013

2014

2015

2016

2017

Gross exports of U.S. crude oil and refined petroleum products have more than doubled
over the past six years, increasing from 2.4 MMbbl/d in 2010 to 5.2 MMbbl/d in 2016. Distillate, gasoline and propane exports were all trending sharply upward through the end
of the first quarter of 2017, and U.S. crude oil exports reached 1.1 MMbbl/d in February
2017-the highest monthly level to date since restrictions on exporting domestically produced crude oil were lifted in late 2015.

the Panama Canal increases export ability
by reducing time and transportation costs
for LNG vessels transiting from Atlantic
Basin liquefaction terminals to key markets
in Asia and South America's western
coast," the agency relates. "The expanded
canal can accommodate an estimated 90
percent of the world's LNG tanker fleet."
Four other lower-48 LNG export facilities are under construction and expected
to be completed during the next few
years, the agency continues. Combined,
these five "first-wave" U.S. LNG plants
are expected to have an operational export
capacity of 9.2 Bcf/d, EIA calculates. As
these facilities commence operations and
ramp up capacity, LNG gross exports
will jump from 1.9 Bcf/d in 2017 to 2.8
Bcf/d in 2018, and keep moving higher
thereafter, EIA forecasts.
Dominion Energy's Cove Point facility
in Maryland (5.25 mtpa in nameplate
outlet capacity) is scheduled for startup
by the end of 2017, followed in 2018 by
the first two trains at Cheniere's Corpus
Christi facility (9 mtpa) in San Patricio
County, Tx. Designed ultimately for five
trains, Cheniere says it is developing a
third train (4.5 mtpa) at Corpus Christi.
Operations at Sempra Energy's threetrain Cameron LNG terminal (14.95
mtpa) in Louisiana also are scheduled to
begin in early 2018. And EIA says
Freeport LNG plans to begin operations
sequentially at the initial three trains at
its Freeport, Tx., plant between fourthquarter 2018 and third-quarter 2019.
Each train has a capacity of at least 5.0
mtpa for as much as 15.0 mtpa in combined send-out capacity.
"By the end of 2017, trains one-four
40 THE AMERICAN OIL & GAS REPORTER

at Sabine Pass are expected to be fully
operational, and Cove Point is expected
to come on line," the agency says.
"Cameron LNG train one is scheduled to
come on line in July 2018, followed by
train two in November. Freeport LNG
also is scheduled to come on line in November. The Cameron and Freeport facilities will require a few months to ramp
up and are projected to operate below
nameplate capacity in 2018."
In total, the International Gas Union
says nearly 58 mtpa of new U.S. liquefaction capacity is under construction,
which is equivalent to 17 percent of total
global capacity.
U.S. propane exports have accelerated
also. Propane inventories had been above
historical norms since 2014, EIA data
show, but declined by 59 million barrels
during the 2016-17 heating season-the
largest draw ever, despite unseasonably
mild winter temperatures-to finish below
the five-year average by early March for
the first time since May 2014. During
the past four years, the agency notes,
new and expanded export terminals and
a growing shipping fleet have increased
U.S propane export capacity. Gross monthly propane exports were 1.05 million
barrels a day in December, the first month
that propane exports exceeded 1.0 MMbbl/d. EIA says expanding petrochemical
sector demand in Asian countries is
driving U.S. propane export growth.
Increasing Gas Production
After 14 consecutive months in which
U.S. dry natural gas production lagged
behind output from the previous year's
corresponding month, production increased

by 900 million cubic feet a day in June
compared with the same month in 2016,
averaging 72.5 Bcf/d. "Production (will)
rise through 2017 and 2018 in response
to forecast price increases and large increases in LNG exports," EIA estimates
in its July Short-Term Energy Outlook.
Overall, it forecasts dry natural gas production will rise 1.0 Bcf/d (to 73.3 Bcf/d)
in 2017 and another 3.1 Bcf/d in 2018,
representing annual increases of 1.4 and
4.3 percent, respectively.
Noting flat Henry Hub spot prices
over the past several months that had averaged $3.04 an MMBtu in the fourth
quarter of 2016 as well as during the first
half of 2017, the July Short-Term Outlook
reports that prices averaged $2.98/MMBtu
in June. EIA predicts Henry Hub natural
gas spot prices will average $3.10/MMBtu
this year and $3.40/MMBtu in 2018.
"Closer-to-normal winter temperatures
are expected this winter following last
year's warm winter, which contributes
to growth in residential and commercial
consumption. Also, export growth is forecast to increase in the second half of
2017 and 2018. Both factors could contribute to modest upward price pressure,"
the July Outlook reads.
Based on forecasts by the National
Oceanic & Atmospheric Administration,
EIA projects 2017 heating degree days
will be similar to 2016 levels. The first
quarters of both years were warmer than
normal, leaving combined residential and
commercial natural gas consumption in
2017 almost unchanged from 2016. However, EIA says it expects heating demand
to increase by 1.2 Bcf/d year-over-year
in 2018.
"Growth in 2018 is largely because
of a forecast 8 percent increase in heating
degree days based on the NOAA forecast
of a return to relatively normal temperatures," EIA says.
Natural gas consumption in the industrial sector increased by 2.2 percent
in 2016, and is forecast by EIA to climb
1.4 percent in 2017 and 2.6 percent in
2018. The main driver is new petrochemical projects coming on line that use
natural gas as a feedstock, particularly
fertilizer and methanol plants, the agency
explains.
Looking at natural gas storage, which
stood at 2.94 Tcf on July 7, EIA projects
that late summer injections will leave inventories at 3.94 Tcf by the end of
October, which would be 2 percent higher
than the five-year average, but 2 percent



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Contents
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