Elba Liquefaction Restarts One Unit as More Cancellations Expected to Hit US Terminals
05.25.2020 - NEWS

May 25, 2020 [S&P Global Platts] – Kinder Morgan has restarted one of three liquefaction units at its Elba export terminal in Georgia that it shut down after a fire earlier this month and expects to start up a second by the end of this week, the company said Wednesday.

The development comes as feedgas flows to the six major US LNG export facilities fell below 6 Bcf/d for the first time in almost seven and a half months, according to S&P Global Platts Analytics data.

The facilities face the prospect of widespread cancellations this summer due to weaker than normal global demand, largely because of the coronavirus pandemic and relatively low international prices. Numerous developers of US liquefaction facilities have delayed final investment decisions until 2021 or stopped providing updated timelines.

Backed by a 20-year offtake agreement with Shell, Elba Liquefaction near Savannah is the smallest of the major US LNG export facilities. The terminal – originally built to import LNG and later converted to handle exports after the US shale revolution – utilizes Shell’s Movable Modular Liquefaction System design.

Elba, which shipped its first cargo in December 2019, will have a capacity of 2.5 million mt/year when all 10 trains planned for the facility are completed later this year.

A fire in a mixed refrigerant compressor of Unit 2 early last week caused that unit to be shut down. Kinder Morgan shut down two adjacent units, 1 and 3, as a precaution.

Unit 3 began the restart process late Tuesday and Unit 1 is expected to begin the restart process by the end of this week, spokeswoman Katherine Hill said in an email Wednesday.

“We are conducting an investigation into the cause of the fire and do not have an estimated date for when Unit 2 will be returned to service at this time,” Hill said.

A fourth unit that was shut down for maintenance as part of the commissioning process remained offline Wednesday. Hill said she had no additional information on when Unit 8 would be restarted.

Following the fire, observable gas deliveries to Elba fell to near zero for six consecutive days. Approximately 8 MMcf/d was observed Tuesday, followed by 21 MMcf/d on Wednesday, Platts Analytics data shows.

Total feedgas deliveries to major US liquefaction terminals registered approximately 5.9 Bcf/d on Wednesday, the first time it fell below 6 Bcf/d since October 10, 2019, Platts Analytics data show. The latest figure is down 39% from the record 9.7 Bcf/d that flowed to US LNG terminals on March 29.

The bulk of the feedgas dropoff is due to lower deliveries to Cheniere Energy’s Sabine Pass facility in Louisiana and Corpus Christi facility in Texas. The company said April 30 it was reviewing different options for adjusting LNG operations if the weak market conditions persisted.

Wednesday was the deadline for Cheniere offtakers to notify the company of any cargo cancellations for July loading. A few traders have told Platts that as many as 20-30 cargoes could be canceled for July loading across US LNG export terminals. That would be roughly on par with cancellation numbers reported for June.

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