Dawn supply dynamics could be headed toward a fundamental shift this winter. Union Gas is bringing on additional capacity to move gas from Dawn toward Toronto and further east while a substantial amount of longhaul contracts to move gas from Alberta to Ontario are set to roll off or transfer their supply source to Dawn. Union Gas’ Dawn-Parkway expansion is in response to the company’s view that supplies heading into Ontario from Alberta via longhaul transportation on TCPL Mainline are declining and will continue to do so. One aspect of this shift away from longhaul contracts involves over 600 MMcf/d of contracts to take gas from Alberta to Eastern markets will be shifting their supply source to Dawn. This week’s feature, however, will look at 300 MMcf/d worth of longhaul contracts that are set to e
Total US supply jumped 0.4 Bcf/d for Tuesday from Monday as a spike in net Canadian imports offset production declines. Declining outflows back to Canada on Vector Pipeline have boosted the net import figure (imports minus exports), as exports here fell about 350 MMcf/d from yesterday. Outflows on Vector have been strong this month likely due to strong injections at Dawn, but Dawn is now just 8 Bcf below the 268 Bcf listed capacity, and slowing injections over the last several days may be leading to less gas getting sourced from Vector. Production declines in the Northeast drove US production down 0.4 Bcf/d, as the Appalachian Ohio, Appalachian PA South Dry and Appalachian PA Southwest Wet regions all fell by roughly 95 MMcf/d from Monday. Power burn increased 0.1 Bcf/d Tuesday, as increases in the Northeast and Texas were mostly offset by declines in the Southeast and Southwest.
Mexico took its first ever cargo of US sourced LNG at the country’s Manzanillo terminal on September 25. The cargo was delivered upon the 3.5 Bcf Stena Clear Sky, and was likely a spot offering from Cheniere, which owns rights to all spare liquefaction capacity at Sabine Pass. The LNG import cargo to Manzanillo adds evidence to support Bentek’s belief that Los Ramones Phase II South is still offline or only in partial service. Peru LNG announced last week they had begun talks to renegotiate the supply contract with Manzanillo, but the timing to agree to a renegotiation is highly dependent on the startup of the Phase II South project, which will decrease the need for baseload LNG imports into the Manzanillo terminal. Texas exports to Mexico continue to tower above its level a year ago, averaging 2.93 Bcf/d month to date, compared with 2.49 Bcf/d over the comparable period last year, and are likely to experience a greater divergence when Phase II South comes online.