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Venture Global starts LNG production at second Louisiana plant; Plaquemines LNG becomes eighth LNG export facility in the US to come online since 2016.
According to a Reuters report, Venture Global’s Plaquemines LNG export facility (Plaquemines Parish, Louisiana) could start to liquefy natural gas as early as today. It will mark the first new U.S. LNG export plant to come online in two years. The 20 million metric tons per annum (MTPA) export plant was set to draw over 100 million cubic feet (MMcf/d) of natural gas for the first time yesterday. When fully online, it will use 2.6 billion cubic feet per day (Bcf/d) of natural gas. We suspect some (much?) of the gas comes from the Marcellus/Utica as the plant has an interconnection with the Texas Eastern Transmission Company (TETCO) pipeline---a pipeline that flows M-U gas southwest. However, we're not elated with the news of Plaquemines' startup.
As mightily as U.S. LNG exports have impacted global trade dynamics, so have U.S. natural gas flows been reshaped by the pull toward Gulf Coast export terminals. The next new terminal on deck is Venture Global’s enormous Plaquemines facility in Louisiana, which could begin taking feedgas as early as late fall 2024 and will eventually ramp up to more than 2.6 Bcf/d. For Southeast Louisiana, home to a massive industrial corridor along the Mississippi River as well as the U.S. natural gas benchmark Henry Hub, the introduction of such a huge source of demand will change how gas flows into and out of the region — with knock-on effects across the Gulf Coast. In today’s RBN blog, we’ll turn once again to our Arrow Model to help illuminate what the path forward may look like.
In our first blog in this series, My Aim Is True, we introduced the concept of the Arrow Model — a proprietary RBN analytical framework that organizes Texas and Louisiana into pipeline “corridors” that can be used to assess changes in regional inflows and outflows via groups of pipes that serve similar markets from comparable supply sources. These pipeline corridors are aggregations of pipelines connecting relevant market hubs — some within Texas and Louisiana and others outside the two states.
We also identified the LNG corridors through which gas exits the Gulf Coast. That brought us to a key takeaway of Part 1 — that we would see a mid-decade tightening in Louisiana gas markets relative to Texas. As we get down below the state level, into the more granular regional levels within Louisiana and Texas, it becomes increasingly challenging for anybody without a robust analytic framework to accurately parse out what’s going on. That’s because at the state level we can see aggregate supply and demand statistics from the Energy Information Administration (EIA) as well as detailed natural gas flow statistics for FERC-regulated interstate pipelines. (See Shall We Gather at the River for a disambiguation of interstate and intrastate gas pipelines.) Within a state, particularly ones as big as Texas or with as many legacy gas pipelines as Louisiana, modelling how gas flows becomes much more interesting. At RBN, we refer to this as the “big circle, little circle” problem; meaning that it’s much easier to develop a directionally correct model for a large geographic area than it is for a much smaller one. But that’s just exactly what we will do in this and subsequent pieces concerning the Arrow Model.
