Freeport LNG plans to restart its Texas export facility in mid-December

Nov 18 (Reuters) – US liquefied natural gas company Freeport LNG said it is aiming to restart its export facility in Texas by mid-December, which has been closed for six months after a fire.

Freeport, the second largest US LNG export facility, was shut down in June after an explosion energy consultants said was the result of numerous factors including human error and inadequate operating and testing procedures.

US LNG exports have been steadily increasing for years, and that supply has been crucial for European buyers since Russia cut off the continent’s natural gas supplies in response to sanctions against Moscow following its invasion of Ukraine.

Freeport said in a press release that it expects to convert about 2 billion cubic feet of gas per day (bcfd) to LNG in January 2023 and to reach full production with both docks in March 2023.

According to Refinitiv, the United States is currently converting about 12 billion cubic feet of gas to LNG.

The federal pipeline safety agencies this week released a heavily redacted consultant’s report blaming inadequate operating and testing procedures, human error and exhaustion for the June 8 blast.

Officials with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) were not immediately available for comment.

Freeport said it has submitted proposed remedial actions for approval to safely resume initial operations.

By the end of last week, Freeport LNG had repeatedly said the facility was on track to start operating again in November.

RESTART IN DECEMBER

But many analysts said earlier this week that the plant could not restart until December or later because the company has not yet submitted its restart plan to federal authorities.

Freeport’s closure has forced customers to buy expensive LNG from other sources to supply their own customers.

A Freeport customer, JERA, Japan’s largest LNG buyer, said in late October that it plans to record a 110 billion yen ($751 million) loss related to the Freeport closure, mainly due to higher costs for the Buy alternative fuels from the spot market.

Another Freeport customer, Osaka Gas (9532.T), said it also suffered financial impact from the Freeport outage.

In August, LNG prices reached record highs of more than $90 per million British Thermal Units (mmBtu) at the Dutch Title Transfer Facility (TTF) in Europe and almost $70 at the Japan Korea Marker (JKM) in Asia.

This compares to an average of around $7 per mmBtu this year at the US Henry Hub gas benchmark in Louisiana.

Freeport’s other customers include units of Osaka Gas (9532.T), BP (BP.L), TotalEnergies (TTEF.PA) and SK E&S. JERA is an alliance between entities of Tokyo Electric Power Co Holdings (9501.T) and Chubu Electric Power Co (9502.T).

Since Freeport will not restart in November, some LNG vessels that either went to Freeport, like LNG Rosenrot, or had been waiting outside the facility, like Prism Brilliance, have proceeded to other ports.

LNG Rosenrot is now en route to Gibraltar, while Prism Brilliance is based outside of Corpus Christi, Texas, where another US LNG company, Cheniere Energy Inc (LNG.A), has an LNG export facility, Refinitiv vessel tracking data showed .

Reporting by Kavya Guduru in Bengaluru and Scott DiSavino in New York; Editing by Jonathan Oatis, Paul Simao and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

Covers the North American power and natural gas markets.

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