The Daley Note

LNG demand along the Gulf Coast is expected to more than double by the end of the decade, requiring significant investments in pipelines. Recent regional price volatility also signals a need for more storage to manage rapid growth along the LNG corridor.

LNG projects in Louisiana and southeastern Texas currently account for just under 13 Bcf/d of market demand, including Sabine Pass, Cameron, Calcasieu Pass, and Plaquemines LNG. East Daley Analytics’ Macro Supply & Demand Forecast predicts feedgas demand could grow to 21.7 Bcf/d by early 2029, when several large-scale projects will have started service: Golden Pass, CP2, Port Arthur LNG, and Louisiana LNG (see figure below from Energy Data Studio).

These LNG projects will create more demand at the Gillis hub in southwestern Louisiana and at other market centers in Louisiana and Texas. Demand from LNG terminals is already creating dislocation in regional prices amid recent high winter demand.

At the end of January, prompt-month TETCO WLA (East Daley’s proxy for the Gillis hub) traded $1.63/MMBtu above the Henry Hub, spurred by demand and supply outages from Winter Storm Fern. For a brief period, WLA traded as much as $6.28/MMBtu above the Henry Hub benchmark (see figure). Volatility like this creates opportunity for new storage projects, spurring buyers and sellers to seek more flexibility to manage regional price swings.

One such project is White Castle Energy Hub, a high-deliverability storage expansion in the emerging Louisiana LNG corridor. The project is holding a non-binding open season from Feb. 4 to March 4 for a salt cavern project in White Castle in Iberville Parish in southeastern LA.

Phase I targets a 2028 in-service and includes 20 Bcf of working capacity from three existing caverns ready for conversion. Phase I plans receipt and delivery points with several nearby inter- and intrastate pipelines, including ONEOK, Louisiana Intrastate Gas (LIG), Acadian, Sonat and TETCO.

Phase II plans for an additional 20 Bcf from two caverns currently under construction, with a planned in-service in 2030. Phase II would add new interconnects with Gulf South and Florida Gas. An upside expansion beyond 40 Bcf of working gas is feasible, depending on demand from the open season.

Gulf South Pipeline also recently held an open season for a 10 Bcf expansion at its Petal Gas storage complex in Mississippi. The open season, which ran through Feb. 4, followed commitments from two anchor customers for 8 Bcf of the proposed salt dome expansion. The Boardwalk Pipelines subsidiary aims to place the project in service by 2030.

East Daley sees opportunity for storage projects like White Castle and the Petal Gas expansion. On the one hand, Kinder Morgan’s (KMI) Trident Intrastate (+2 Bcf/d, in-service date of 1Q27) and the combined Blackfin–CP Express line (+3 Bcf/d) will create new capacity so Texas gas can reach Louisiana LNG demand growth. This will reduce the likelihood of constraints and should soften regional basis differentials.

However, we still expect some volatility ahead, driven primarily by the timing of new infrastructure. While Blackfin is expected to come online as early as the end of 2026, the pipe only extends as far as Jasper County in Texas, and an interconnect with CP Express is necessary to move molecules across the border. CP Express is still under construction, and we expect that pipeline to primarily serve Venture Global’s CP2 LNG, which we don’t expect to come online before late 2027.

See East Daley’s Southeast Gulf S&D Report for more information. In the longer term, there will still be capacity constraints along major corridors in and out of the Lower Louisiana market. Storage facilities like White Castle and Petal Gas will be necessary for balancing the market in the coming decades, and can provide significant windfall profits during weather events like Fern. – Oren Pilant Tickers: KMI, VG.