MARKETS REVIEW LNG Recap: Berkshire Hathaway …...2020/07/06 · . . . from MARKETS REVIEW - Berkshire Hathaway Affiliate to Takeover, pg. 1 The deal comes as the global gas market

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MONDAY, JULY 6, 2020 - VOL. 1, NO. 183

MARKETS REVIEW

LNG Recap: Berkshire Hathaway Affiliate to Takeover Operations at Cove Point

A Berkshire Hathaway Inc. affiliate will take over opera-tions of the Cove Point liquefied natural gas (LNG) export terminal after it agreed to acquire a 25% stake in the facility as part of a broader $9.7 billion deal to buy Dominion Energy Inc.’s natural gas transmission and storage segment.

Dominion will retain a 50% passive interest in the terminal, one of six in operation across the United States that’s located on the Chesapeake Bay in Lusby, MD, south of Baltimore. Dominion is divesting the transmission and storage assets as it plans to focus entirely on its state-regulated electricity and natural gas utilities. The deal is expected to close in 4Q2020.

The sale of interest in Cove Point to Berkshire Hathaway Energy follows another late last year, when Dominion sold a 25% stake to Brookfield Asset Management Inc. in a deal valued at more than $2 billion.

Cove Point has storage capacity of 14.6 Bcf and the ability to send out 1.8 Bcf/d. It was built in the 1970s to import LNG and started exporting in April 2018. ...cont' pg. 4

Jordan Cove LNG Secures Export License, but Uphill Battle Remains 8

Daily Rundown• Dominion has sold another 25% stake in Cove

Point LNG• U.S. feed gas deliveries have again plummeted as

production is on the rise• Jordan Cove LNG cleared another regulatory

hurdle, but still faces a series of challenges

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MONDAY, JULY 6, 2020

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...cont' pg. 6

. . . from MARKETS REVIEW - Berkshire Hathaway Affiliate to Takeover, pg. 1

The deal comes as the global gas market continues to face headwinds due to the Covid-19 pandemic, but is ultimately expected to continue growing in the years ahead. U.S. LNG feed gas demand dropped by more than 1 Bcf day/day on July 1 and has remained around 3 Bcf/d compared to the June average of roughly 4 Bcf/d with dozens of cargoes for July and August lifting cancelled as it remains uneconomic to move American gas overseas at current prices.

The decline in LNG feed gas demand comes as





...cont' pg. 7

U.S. natural gas supplies continue to increase. Tudor, Pickering, Holt & Co. (TPH) said associated natural gas volumes increased by 1.5 Bcf/d last week, while overall gas volumes were up 2 Bcf/d.

“The increase in production and decrease in LNG puts the mar-ket back into an oversupply situation on a weather neutral basis, but thankfully current forecasts are very constructive of gas demand,” TPH said of the July heat that’s settled in across parts of the country.

Meanwhile, Bloomberg New Energy Finance (BNEF) warned in a note last week that if Covid-19 related



...cont' pg. 8

energy demand loss continues, natural gas imports could fall by 1.1% to 5.3% this year. If the virus continues to prove re-surgent, import declines could persist into 2024, with demand in the emerging markets of south and southeast Asia likely to see the biggest hits if pipeline and regasification infrastructure is delayed, BNEF said.

In other international developments, regulators in Denmark on Monday cleared the Nord Stream 2 (NS2) pipeline project to move ahead with work on the last 100-mile stretch of



exports from Jordan Cove about four months after the Federal Energy Regulatory Commission finally authorized

REGULATORY

Jordan Cove LNG Secures Export License, but Uphill Battle Remains

The U.S. Department of Energy (DOE) on Monday issued an export license for the belea-guered Jordan Cove liquefied natural gas (LNG) terminal proposed for Coos Bay, OR.

The facility would be the first of its kind on the West Coast if it’s built and would further ex-tend the reach of American natural gas into “key exporting markets” in Asia and beyond, said Steven Winberg, assistant secretary for fossil energy, in a virtual signing ceremony.

“There are few regions where it is more critical to advance energy security than in the Asia-Pacific region,” said Secretary Dan Brouil-lette, adding that countries like India, Japan and South Korea are also dependent on Russia and the Middle East for gas imports.

“If the United States can export LNG to the Asia-Pacific from our West Coast, we can help those nations and others in the region reduce their reli-ance on countries that use energy as political leverage,” he added.

Brouillette signed the final long-term order authorizing

the system in Danish waters. The Danish Energy Agency cleared the Gazprom-led project to use pipe-laying vessels with anchors instead of those that use more complex self-positioning technology that were targeted by U.S. sanctions.

Work on the pipeline stopped in December after U.S. sanc-tions forced privately-held Allseas to suspend underwater pipe-laying activities in the Baltic Sea. The 1.9 Tcf/year NS2 would export gas from Russia to Europe across the Baltic Sea, terminating in Germany near the existing Nord Stream pipeline that follows a similar path. The Trump administration has resisted the project as it promotes U.S. LNG imports in the region and works to curb Russia’s economic influence there.

Elsewhere, shippers and traders that have booked capacity at a critical outlet to move gas from Slovakia to Ukraine this sum-mer are likely to face steep costs. Ukrtransgaz needs to conduct unexpected maintenance from August through October on the Budnice interconnection, which had threatened to stop flows. The European gas market has increasingly utilized Ukranian storage facilities as others on the continent are filling.

While Slovakia’s system operator will offer capacity at an-other exit point, Velke Kapusany, Slovakian regulators rejected two solutions put forward by the Ukranian system operator to cut costs associated with the maintenance outage. Slovakia’s URSO said it would not allow shippers to transfer the capacity they booked on Budince to Velke Kapusany free of charge, or virtually merge the two points during maintenance.

European inventories continued to fill over the weekend as storage was at more than 81% of capacity on Saturday. Ukrani-nan storage was at 62% of capacity the same day, according to the latest available data. n

...cont' pg. 10



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NGI’s LNG INsIGht

MoNday, JuLy 6, 2020

VoLuMe 1, No. 183

the siting, construction and operation of the terminal. The proj-ect has cleared a series of regulatory hurdles and faced staunch opposition from environmental groups since it was proposed by Veresen Inc., which is now part of Pembina Pipeline Corp.

Despite the federal approvals, the export terminal faces an uphill battle in Oregon, where regulators have denied key authorizations for the project, including a water quality certifi-cation and a dredging permit. The terminal would also need to execute long-term supply contracts with global buyers, which have been increasingly hard to come by in a market full of cheap natural gas.

Jordan Cove would be capable of liquefying up to 1.04 Bcf/d for export. It would include a pipeline gas conditioning facility, five liquefaction trains, two full-containment LNG storage tanks and associated equipment, an LNG loading platform and transfer line, and marine and associated facilities. n

See NGI’s LNG Glossary Here

MARKETS REVIEW LNG Recap: Berkshire Hathaway …...2020/07/06 · . . . from MARKETS REVIEW - Berkshire Hathaway Affiliate to Takeover, pg. 1 The deal comes as the global gas market

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