Boston Winter Draws Caribbean LNG Cargoes in Rare Price Play

(Bloomberg) -- A third Caribbean liquefied natural gas cargo is headed for Boston, where two other await colder weather before unloading in an unprecedented bet on price spikes this winter.

GasLog Partners LP-owned Methane Lydon Volney is expected to arrive in Boston Jan. 11 with an LNG cargo from Trinidad & Tobago, according to ship tracking data compiled by Bloomberg. The tanker will join Cadiz Knutsen and Excelerate Energy's Exemplar, which are both anchored in Massachusetts Bay and also carrying LNG cargoes from the Caribbean nation.

With New England's limited gas pipeline capacity, Boston uses LNG imports to fill demand gaps, making it one of the most expensive U.S. markets. Although current prices there aren't as attractive as in Europe, where an energy crisis has lured scores of U.S. gas tankers, that could change quickly later this month when temperatures are expected to plunge.

Power prices in the region are already spiking on the current cold weather, increasing four-fold on Tuesday from the previous day.

It's not the first time Excelerate, which owns the Northeast Gateway deepwater port offshore Boston,has kept a cargo from the Caribbean waiting for a winter price surge in Massachusetts Bay. One of its tankers did that in the winter of 2019. But two Caribbean cargoes lingering at anchorage, while a third is on its way -- that's a first.

Cadiz Knutsen briefly docked at the Everett LNG import terminal near Boston on Dec. 26 before returning to sea and anchoring nearby. Exemplar arrived on Dec. 28. Typically, LNG tankers dock for one or two days and leave.

It's unclear whether Methane Lydon Volney already has a set delivery or will also wait for the best time to sell.

Natural gas sold on Boston's Algonquin City Gate Hub was trading Tuesday morning for more than $8 per million British thermal units on the spot market, and more than $18 on the futures market for February delivery, according to traders and data compiled by Bloomberg. That compares with $3.76 for the U.S. Henry Hub benchmark .

Although those prices are still lower than the $29 seen in Europe, they could jump quickly during a cold blast. During a cold snap early last month, New England spot gas traded as high as $62.50.

“These cargoes are likely being rationed for colder days as current Algonquin spot prices still do not incentivize economic LNG send out,” said Ashwin Ravichandran, natural gas analyst, Energy Aspects.