LNG Tankers Anchored Off Boston To Capitalize On Impending Energy Crisis

Europe’s energy crisis is coming to New England as the state is one cold snap away from soaring natural gas prices. New England has refused to build the necessary pipeline infrastructure to expand gas flows from the Appalachian Basin. It has even shuttered a nuclear power plant. 

New England opposed natural gas pipelines and shut down nuclear. If you live in New England, I suggest you pick up a wool blanket or two. In the war between platitudes and physics, physics is undefeated.

— Doomberg (@DoombergT) December 24, 2021

Believe it or not, New England’s electricity grid is extremely fragile. Instead of building pipelines to neighboring states, New England imports liquefied natural gas (LNG) overseas. 

We noted Thursday, New England is behind in procuring LNG from the international market. This means that the state is now a victim of that bidding war and is facing the prospect of dramatically less LNG supply this winter and extremely high prices. 

But hold up, why doesn’t New England just receive LNG via tankers from terminals situated on the Gulf Coast of the U.S.? Well, for domestic cargo, they must be carried on US-flagged ships, and there are currently no U.S.-flagged LNG tankers. So that means New England must compete in international markets, meaning February delivery on New England’s Algonquin Hub is around $18 per British thermal unit — or about five times higher than the U.S. benchmark. 

Weather forecast via Bloomberg data shows average temperatures in Boston are expected to slide after New Year’s Eve, reaching 15 degrees Fahrenheit by Jan. 8. That’s a sharp difference from today’s average temperature of around 45 degrees Fahrenheit.

Expecting impending doom, commodity traders have anchored two LNG tankers off Boston’s coast, waiting for temperatures to dive so they can take advantage of massive arbitrage opportunities. 

Spanish-flagged Cadiz Knutsen and Excelerate Energy’s Belgian-flagged Exemplar arrived in Massachusetts Bay earlier this week with cargoes from Atlantic LNG in the Caribbean nation of Trinidad & Tobago. Their arrival is timed just ahead of a weekend cold blast that’s expected to plunge temperatures below freezing in one of the most undersupplied and expensive U.S. gas markets. -Bloomberg 

Financial publication Doomberg penned this week, “New England Is An Energy Crisis Waiting To Happen.”