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Tuesday, March 28, 2023

Fire-damaged Freeport LNG Receives Approval for Partial Restart

Maritime Activity Reports, Inc.

February 21, 2023

(File photo: Freeport LNG)

(File photo: Freeport LNG)

Freeport LNG, the second largest U.S. liquefied natural gas exporter, said on Tuesday it had received regulatory approval to restart commercial operations at its Texas processing plant.

The U.S. Federal Energy Regulatory Commission (FERC) approved the partial restart of two liquefaction trains, two tanks, and one loop and dock each, a filing showed on Tuesday. Restart of a third train, along with a tank, a loop, and a dock, would require additional permission.

"The second LNG berth and third LNG storage tank are expected to return to service in May," Freeport said.

The closely-held U.S. liquefied natural gas (LNG) export facility was knocked offline by a fiery blast June 8 and barred from resuming production while federal regulators conducted an extensive safety review of its operations and staffing. The blast resulted from inadequate operating and testing procedures, operator fatigue and other shortcomings, a review found.

The outage sent LNG prices soaring, with futures prices in Europe $60 per million British thermal units (mmBtus) last July as buyers shunned Russian gas over its invasion of Ukraine. Europe restocked storage and prices traded about $16 per mmBtu this month.

The company, founded by billionaire Michael Smith, initially had pledged to resume partial operations last October, but that proved too optimistic as investigators sought more details on its operations.

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 natural gas supply in response to sanctions placed on Moscow after its invasion of Ukraine.

Freeport LNG produces about 15 million tonnes per annum of the superchilled gas via its three procesing units. It has said it expects to be processing about 2 billion cubic feet per day (bcfd) of gas into LNG in January 2023, and reach full production in March 2023.

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

The repeated delays winning regulatory approvals raise the stakes on plans to construct a fourth processing train at its Quintana, Texas, facility.

The company agreed to add 30% to staff numbers at its plant to address operator and training shortcomings discovered by investigators.

(Reuters - Reporting by Deep Vakil in Bengaluru and Arathy Somasekhar; additional reporting by Bharat Govind Gautam, editing by Deepa)

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