First Look: Zachry files for bankruptcy amidst rising Golden Pass LNG costs
May 22, 2024
Oil is trading lower, around $78, amid a stronger dollar
The US dollar is stronger this morning, while equities are weaker following commentary by the Federal Reserve implying rates may stay higher for longer
The June WTI contract expired yesterday, with July now the prompt month
Russia’s exports have moved higher as the country looks to replace an export cap with a production cut in line with other OPEC+ producers
US to close Northeast gasoline reserve (Reuters)
The Biden administration has decided to shut down the Northeast gasoline reserve and sell nearly 1 MMBbls of gasoline
The reserve was created after Superstorm Sandy in 2014, but storing fuel has been costly
The sale is planned to allow gasoline to flow to retailers in advance of the Fourth of July holiday
US gasoline prices have fallen for four consecutive weeks now to $3.58/gallon and are now about 30% cheaper than the peak at a record of more than $5/gallon in June 2022
Natural gas prices trade lower for a second day amid potential profit-taking and concerns over export demand outlook after the bankruptcy filing of Golden Pass LNG's lead contractor
June ’24 Henry Hub is down 2.7c this morning to trade around $2.644/MMBtu
The Summer ’24 strip is down 0.9c to $2.806 and Winter ‘24/’25 strip is up 0.3c to $3.526
Today’s Euro Ensemble indicates warmer shifts in all regions, particularly in the 6-10 day period, effectively reversing much of yesterday's forecasted cooling with a net gain of +5.5 degrees. (Criterion)
Zachry files for bankruptcy amidst rising Golden Pass LNG costs and alleges the project is $2.4B over budget (Criterion)
Zachry Holdings, lead contractor at Golden Pass LNG, filed for Chapter 11 bankruptcy to address issues related to the $2.4B budget overrun
The project started in 2019 faced delays and cost overruns due to COVID-19 and geopolitical issues, causing significant financial strain
Zachry filed a complaint against Golden Pass LNG Terminal LLC, alleging unexpected challenges and accelerated work led to inflated costs, waiving >$1B in change order claims
Initial feed gas for the Golden Pass LNG project, originally estimated for the second half of 2024, is now delayed to 2025 due to contractor issues
The official target to bring Train 1 online was Sept. 2024, but projected delays of 3-6 months may push this to 1Q25, with Train 1 liquefaction starting in 2Q25 and ramping through the second half of the year
CenterPoint continues to restore service after deadly May 16 thunderstorms (S&P Global)
CenterPoint Energy had almost 216,000 Houston-area electric customers offline around 2 pm CT on May 20, following the May 16 thunderstorms that cut power to over 1 million customers across East Texas and Louisiana
Restoration efforts are hindered by significant damage, with crews encountering buried equipment, downed trees, heavy debris, and unstable soil
Peakloads in ERCOT surged 9.5 GW, or 16.4%, above the 2019-2023 average on May 18, with high temperatures forecasted to keep loads 24% above the five-year average through May 24
CenterPoint said it aimed to restore power to 85% of the 922,000 affected customers by the evening of May 20 and virtually all customers by May 22
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