Shutdown of Fire-Damaged Texas LNG Export Site Extended
Shutdown of Fire-Damaged Texas LNG Export Site Extended
Abstract
June 20, 2022 Mary B. Powers and Debra K. Rubin KEYWORDS construction fire / Energy Construction / Freeport LNG / Liquified Natural Gas / shutdown Order Reprints No Comments Freeport LNG expects partial operation to resume in early September at its $13.5-billion liquefied natural gas plant and export terminal in Freeport, Texas, following a June 8 gas leak-triggered fire and explosion in its piping system. Freeport LNG speculated that overpressure and rupture of a segment of an LNG transfer line caused the accident. The Freeport plant began operation in 2008 as an import terminal and began exporting gas in 2019.Freeport LNG declared a force majeure on LNG exports from the plant until September, Bloomberg reported. According to S&P Global, the Freeport LNG outage also could impact the Asian LNG market as buyers compete directly with those in Europe aiming to reach an EU target of 80% gas storage capacity by Nov. 1.South Korean energy developer SK E&S, which imports 2.2 million metric tons per year of LNG from the complex, said it will seek capacity in the spot market, citing strong demand and delayed restart of the country's nuclear reactor units, S&P Global noted. Freeport's shutdown demonstrates "Quite clearly how interconnected markets are," Munton says, noting that while the spot price of natural gas soared in Europe, it dropped dramatically in the U.S. after Freeport LNG's shutdown. Shifts in Freeport Expansion ContractFreeport LNG has approval to build a fourth LNG train at the Texas site, but on May 17 asked the Federal Energy Regulatory Commission for permission to delay its completion until August 2028. CEO Michael Smith said in March that the firm could reach final investment decision in the first quarter of 2023.The Freeport LNG complex is the second largest in the U.S. after Cheniere Energy's Sabine Pass LNG plant in Louisiana, which has six trains.