LNG

U.S. LNG feedgas demand is weakening with Freeport LNG pulling nominations down to about 1 bcf/d as major maintenance began on July 10, while Golden Pass has also been showing erratic feedgas behaviour during ramp-up.

Feedgas intake at Freeport LNG is ramping up following a brief shutdown last week. A compressor system malfunction had reduced feedgas to 1.5 billion cubic feet per day (bcfd), well below the terminal’s full capacity of around 2 bcfd across all trains.

Freeport LNG Development, majority-owned by founder and CEO Michael Smith, has ramped down operations in the wake of Winter Storm Uri and is considering rescheduling cargoes to long-term buyers to accommodate a spike in US gas demand since the onset of this week’s massive winter storm.

As of January 25, the ‘monster winter storm’ Fern has severely impacted feedgas supply for US LNG exports, with restrictions on the Creole Trail pipeline reducing flows to Sabine Pass terminal. Freeport LNG might also go offline as ice is accumulating along its feedgas corridor. 

Osaka Gas seeks to expand its oversees LNG business via US upstream and power plant investments through subsidiary Sabine Oil&Gas, with Texas shale gas production expected to reach 3.8 mt LNG-equivalent this fiscal year.

Freeport LNG Development and the US Pipeline Hazardous Materials Safety Administration (PHMSA) have signed a Consent Agreement to enable the possible restart of partial operations in October.

The facility was closed, following an 8^th June fire and explosion, which occurred at the Texas Freeport LNG's liquefaction plant.  

Under the terms of the agreement, the obligations are intended to ensure that Freeport LNG can safely resume initial LNG production and thereafter ultimately return to full operation of all its liquefaction facilities.

In the near term, the agreement includes certain corrective measures, many of which are currently underway, that Freeport LNG is to take to obtain PHMSA approval for an initial resumption of LNG production at its liquefaction facility.

Freeport LNG said that it believed that it can still complete the necessary measures, along with repair and restoration activities, in order to resume initial operations in early October.

Initial operations are expected to include three liquefaction trains, two LNG storage tanks and one LNG loading dock, which the company said will enable it to deliver around 2 bill cu ft per day of LNG - enough to support its existing long-term customer agreements.

In addition to the repair and replacement of Freeport LNG's infrastructure that was damaged in the incident, and as part of the corrective measures to be taken under the agreement, the company is evaluating and promoting initiatives on training, process safety management, operations and maintenance procedure improvements, and facility inspections, the operator said.

Freeport was the second largest US LNG export facility, supplying up to 20% of exports before the fire and explosion caused the complete shutdown of the facilities. 

The explosion was caused by an over-pressurised pipeline, US investigators have reported. 

As a result of the announcement, US natgas prices jumped by more than 7% on Wednesday.

Jan 17 (LNGJ) - Freeport LNG has started commercial operations for the second liquefaction Train of its three-Train facility with the commencement of gas deliveries from BP of the UK under its 20-year tolling agreement. Freeport LNG's Train 1 began commercial operations in December 2019, with the commencement of the Osaka Gas and JERA Co. Inc. tolling agreements.

  “We are thrilled to now be providing service to BP, in addition to Osaka Gas, and JERA ,” said Michael Smith, Founder, Chairman and Chief Executive of Freeport LNG. “We are also especially pleased with the performance of our electric motor drive liquefaction units,” added Smith.

   The company added that construction of Freeport's Train 3 is essentially complete. Gas has been introduced to the pre-treatment facilities and the Freeport expects Federal Energy Regulatory Commission approval to bring gas to the liquefaction site in February. Train 3 remains on track for a commercial start date in May.

Toshiba Corp. said it was facing regulatory hold-ups in its planned off-loading of its US liquefied natural gas business in Texas to a Chinese company, including a tolling agreement for the Freeport LNG project.

The Japanese conglomerate said it was facing complications as the group also attempts to restructure its widespread business operations.

Toshiba, attempting to emerge from a crisis caused by an accounting scandal and massive losses in the nuclear business, is currently in a five-year recovery plan and is set to pay China’s ENN Group to take over a 20-year tolling agreement at the Freeport plant on Quintana Island.

The ENN Group has agreed to accept over $800 million to assume Toshiba’s commitment to the 20-year deal that would amount to 2.2 million tonnes per annum of LNG from the Freeport facility under a liquefaction tolling agreement (LTA) structure.

Under the original plan, the Toshiba-ENN transaction was expected to be completed by the end of March 2019.

Toshiba now says it is facing a delay in securing approval from the Committee on Foreign Investment in the United States, a federal agency that examines the national security implications of foreign investments.

Toshiba had hoped the losses on its LNG investment would not be carried over from the previous fiscal year to the coming business year.

The Japanese group entered the LNG market in 2013 by signing its agreement with Freeport.

ENN Group is a natural gas and LNG market participant listed in Hong Kong.

In China, ENN supplies gas in cities, operates pipelines and engages in gas trading. It is trying to diversify its supply sources by purchasing the Toshiba operations.

Toshiba now say that it hoped to complete the transfer of its interests in the LNG business before the end of April 2019 or shortly thereafter.

The Toshiba deal with ENN involves concluding a purchase and sales agreement for the transfer of all outstanding shares of Toshiba America LNG Corp. to ENN.

Toshiba is making a provision for a 93 billion yen ($838M) loss on its Freeport LNG accord and related activities.

The US Department of Energy said it had issued a short-term order to the Freeport LNG export project being developed at Quintana Island in Texas to export up to 2.14 billion cubic feet per day of natural gas as LNG over a two-year period to both free-trade and non-free trade agreement countries.

Freeport LNG, the US export plant being constructed on Quintana Island in Texas, was granted a permit by the Department of Energy to export an additional 5 million tonnes per annum from a fourth liquefaction Train.