Freeport LNG Delays Texas Export Plant Restart to Second Half January
12.31.2022 By TankTerminals.com - NEWS

December 31, 2022 [Hellenic Shipping News] – Freeport LNG said on Friday it was again delaying the restart of its long-shut liquefied natural gas (LNG) export plant in Texas, this time from the end of the year to the second half of January, pending regulatory approval.

 

Since the plant shut in June, the closely-held company has already extended its restart targets several times from October to November, then to December and then to the end of the year.

Freeport said in a statement “the reconstruction work necessary to commence initial operations is substantially complete.”

The company also said it was submitting responses to the last remaining questions included in the U.S. Federal Energy Regulatory Commission’s (FERC) Dec. 12 data request.

FERC along with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) have to approve before Freeport can return to service.

“Given the time needed for the regulatory agencies to review the company’s responses and to seek any necessary clarification, Freeport LNG now does not anticipate commencing the initial restart of its liquefaction facility until the second half of January 2023,” it said.

U.S. LNG exports have steadily increased for years, and that supply has become crucial to European buyers since Russia has mostly cut off the continent’s gas supply in response to sanctions placed on Moscow after its invasion of Ukraine.

The Freeport shutdown added to the squeeze on global gas caused by Russia’s war. It helped boost prices in Europe TRNLTTFMc1 and Asia JKMc1 to record highs over the summer, while capping gains in U.S. futures NGc1 by leaving more fuel in the United States for domestic use.

Freeport shut on June 8 after an explosion due to inadequate operating and testing procedures, and human error and fatigue, according to a report by consultants hired to review the incident and suggest action.

Small amounts of gas started to flow to Freeport this week for the first time since August, according to data provider Refinitiv.

A source familiar with the matter said Freeport was using the gas to maintain a flare system.

Whenever Freeport returns, U.S. demand for gas will jump. It can turn about 2.1 bcfd of gas into LNG for export, which is about 2% of U.S. daily production.

The company did not say in its latest statement when it expects the plant to return to full power. In the past, Freeport said the plant was expected to reach full power in March 2023.

The lengthy delays have forced big customers including JERA and Osaka Gas9532.T to book hundreds of millions of dollars of losses. Its other big offtakers include BP BP.L, TotalEnergies TTEF.PA and SK E&S.

A couple of vessels have been waiting in the Gulf of Mexico to pick up LNG from Freeport since at early November, while several other ships were expected to reach the plant in late December and January.

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