Freeport LNG misses recovery target for fire-damaged Texas export facility

Nov 14 (Reuters) – The owner of the second-largest US liquefied natural gas (LNG) export facility has yet to submit a final repair plan to regulators, likely pushing a restart into the first quarter of next year, according to a person familiar with the matter.

The outage since a fiery explosion in June has underscored global demand for new gas supplies, prompting major LNG traders and customers of the roughly 16 million tonne-per-year processing plant to buy spare cargo at huge premiums.

Freeport LNG had pledged in August to resume gas processing by early to mid-November and to reach over 85% of full capacity by month-end. The goal was to reach 100% capacity by March 2023.

The company’s November target “is not credible, nor is restarting in December,” Alex Munton, an adviser to Rapidan Energy Group, said in a statement. He expects gas processing to resume in the first quarter of next year “possibly with longer delays”.

US gas prices pared gains on rumors that Freeport’s restart would be delayed. After rising over 8% on Monday on cold forecasts, futures rose less than 1% on the Freeport news.

The U.S. regulator, which oversaw the repairs Monday, had not received Freeport LNG’s full repair plan, sources familiar with the company’s filing said. The Pipeline Hazardous Materials and Safety Administration (PHMSA) said last month that it will not approve a partial restart until all proposed changes are received and accepted.

Rapidan’s Munton said in an interview that the PHMSA review of the repair work, called the Remedial Work Plan (RWP), will take at least a month and could take longer due to the upcoming US holiday.

The closely held company declined to comment on when it expects to submit the required work plan to PHMSA or when it might resume processing operations.

“We are continuing our work to safely bring our facility back online, which includes obtaining the necessary permits,” said Heather Browne, spokeswoman for Freeport LNG.

PHMSA’s earlier review of a Cheniere Energy Inc (LNG.A) storage tank repair suggests it could take weeks to review Freeport LNG’s plan and additional information may be needed, Rapidan’s Munton said.

Cheniere, the largest US LNG exporter, submitted its tank repair plan to the PHMSA in September 2018 and submitted a request for a final decision a few weeks later. The plan was returned as inadequate and rejection confirmed in February 2019.

The PHMSA administrator, who opposed Cheniere’s repair plan, will have the final say on Freeport LNG’s RWP, Munton said.

Uncertainty and missed deadlines have rocked the natural gas markets. Commodity regulators could probe market volatility over unsubstantiated Twitter posts about the plant’s restart last week, analysts at energy consultancy Gelber & Associates wrote on Monday.

The restart reports “exaggerated price volatility, turning an upward movement in prices (on Nov. 11) into a sharp selloff” in gas futures, according to the advisers, who said a Twitter post “appears to be intentionally planning a selloff in gas.” trigger futures prices.”

LNG tankers waited outside of Freeport, Texas to pick up LNG, according to Refinitiv ship tracking data. Prism Diversity and Prism Courage were offshore from the facility, while LNG Rosenrot and Prism Agility were expected in late November.

A vessel, Prism Brilliance, that had been waiting off the coast of Freeport went to anchorage outside of Corpus Christi, Texas, where Cheniere operates a large LNG export facility, according to Refinitiv.

Reporting by Scott DiSavino; Editing by Jonathan Oatis and Lisa Shumaker

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