Freeport LNG on Friday again delayed the restart of the LNG export plant in Texas which has been shut down since a June 8 explosion to the end of the year, pending regulatory approval. The Freeport terminal accounted for around 20% of all U.S. natural gas exports before the explosion and is the second-biggest U.S. liquefied natural gas (LNG) export facility. pushing start-up plans for its Texas. Natural gas futures sold off sharply on the news, they had already been weakened by bearish weather modelling.
“We received (on Thursday) several key approvals from the regulatory agencies that allow us to complete certain critical repairs and commence reinstatement of certain systems,” and “Based upon current progress, and subject to us continuing to meet necessary regulatory requirements, we now anticipate that the restart of our liquefaction facility to be achieved around year end,” Freeport LNG spokesperson Heather Browne told Reuters in an email.
Freeport has already pushed back the plant’s expected restart several times since it shut. In June, the company expected to restart the plant in October. In August, they moved that to November. In November, the company said it was on track to restart the plant in mid-December and get most LNG production back in January with a return to full service in March.
Freeport increasing volatility on Natural Gas Futures
The Freeport LNG terminal has been the subject of fake and varying company statements since the explosion which has added to volatility in the benchmark HH natural gas futures contract. Two days of Freeport Volatility impact
In August, LNG prices hit record highs of more than $90 per million British thermal units (mmBtu) at the Dutch Title Transfer Facility (TTF) in Europe and nearly $70 at the Japan Korea Marker (JKM) in Asia. That compares with an average of around $7 per mmBtu so far this year at the U.S. Henry Hub benchmark in Louisiana.
Freeport Customers Losses
The shutdown forced Freeport’s customers including JERA and Osaka Gas to book hundreds of millions of dollars of losses because they had to buy expensive LNG from other sources to supply their own customers.
Freeport’s other customers include units of BP, TotalEnergies and SK E&S. JERA is an alliance between units of Tokyo Electric and Chubu Electric.
Freeport LNG Capacity and Flow
At full capacity, the plant can turn about 2.1 billion cubic feet per day (bcfd) of natural gas into LNG. LNG feed gas demand fell to a four-month low under 10.4 Bcf/d in the estimates after to the blast. Prior to the Freeport explosion, with the global energy crisis LNG exports volumes were over 13Bcf, a two-month high, putting exports near the 14 Bcf-plus record.
The United States is currently liquefying about 12 bcfd of gas into LNG at the country’s six other big LNG export plants, according to data from Refinitiv. U.S. LNG exports supply has become crucial to European buyers since Russia has mostly cut off the continent’s natural gas exports in response to sanctions placed on Moscow for its invasion of Ukraine.
Freeport Terminal Explosion
Freeport LNG released a statement last month citing human error and staff shortages as possible reasons for the explosion back in June that forced the liquefied natural gas facility offline. It also pointed to deficiencies in procedures related to pressure valve testing and indicator alarms.
Freeport cannot start up until its plans are approved by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). Officials at PHMSA were not immediately available for comment.
Source: Reuters, TC
From The TradersCommunity News Desk