LNG

March 9 (LNGJ) - Freeport LNG Development said it received regulatory approvals from the Federal Energy Regulatory Commission and the Pipeline and Hazardous Materials Safety Administration to restart Train 1, the final required re-start at Freeport’s three-Train liquefaction facility at Quintana Island in Texas. “Freeport LNG's Trains 2 & 3 returned to full commercial operation in recent weeks, reaching production levels in excess of 1.5 billion cubic feet per day,” said the company.

   “As the recommissioning of Freeport's liquefaction facility continues and Trains are restarted, changes in feed-gas flows and production rates are to be anticipated, given the duration of the plant's outage. As previously stated, a conservative ramp-up profile to establish full three-Train production is anticipated to occur over the next few weeks,” Freeport stated.

A leading Texas politician said he believed that the Biden Administration and the US Federal Energy Regulatory Commission had stalled the restart of the Freeport LNG export plant after the June 2022 fire to keep winter domestic natural gas prices low in Texas and the Gulf Coast.

Brooks Landgraf, who is a lawyer and a Republican representative in the Texas state legislature for the West Texas city of Odessa, said the most recent Henry Hub price was $3.25 per million British thermal units, less than a third of the $9.85/MMBtu price last August 22 and “there was no other conclusion” to be drawn.

Landgraf said that Freeport LNG had been ready to resume full operations last mid-November after the fire on June 8 as all the damage had been repaired in early Fall.

He noted that just as full operations were about to kick off, the FERC came up with a list of additional demands that kept Freeport LNG shuttered till the initial start-up was begun on January 14, 2023.

A full resumption isn't expected at the Quintana Island plant until March following a ramp-up of production.

“I am looking at the actions that have been taken and the picture that has been painted and it's reasonable to assume that this is the case,” said Landgraf.

He is also Chairman of the Texas House Environmental Regulation Committee, and added that he had been disappointed but not surprised to see FERC behave in such a “blatantly political” manner.

“I've seen it time and time again, the federal government doing everything it can to curtail the exploitation of our natural resources,” he said.

Hostility

“So this is another front in the Biden Administration's war against fossil fuels,” added Landgraf.

“One thing remains clear. LNG is part of the equation to meet the energy needs of the modern world,” he stated.

“The world needs energy from oil and natural gas to function and we must continue to invest in the Permian Basin and continue producing oil and gas,” he said.

"When I was growing up in Odessa, America was dependent on the Middle East and energy independence was a pipedream. Now the Basin is the secret weapon not only for Texas but for the nation,” he added.

He made his statement after the 88th session of the Texas Legislature was convened on January 20.

“It’s the honor of a lifetime to serve as a voice for the Permian Basin in the Texas House of Representatives,” Landgraf said.

“The hardworking men and women who live and work in Ector, Ward, Winkler and Loving counties deserve to have their voices heard in their state government,” he said.

“I’m headed back to the state capitol to continue fighting to defend and expand their rights and liberties,” he declared.

During the next 140 days, the Texas House of Representatives, along with the Texas Senate, will consider legislation including how to allocate the state’s record budget surplus of nearly $30 billion. 

Freeport LNG has updated the timing of the initial restart of its liquefaction facility on Quintana Island in Texas after repairs and refurbishment following the June 2022 fire.

“The company continues to make notable progress on its path towards the restart of liquefaction operations,” said Freeport.

“As of December 23rd, the reconstruction work necessary to commence initial operations is substantially complete, and the company is submitting responses to the last remaining questions included in the Federal Energy Regulatory Commission’s data request,” added the company.

Freeport explained that given the time needed for the regulatory agencies to review the company’s responses and to seek any necessary clarification, Freeport LNG now does not anticipate commencing the initial restart of its liquefaction facility until the second half of January 2023.

“The company continues to have close, collaborative engagement with the regulatory agencies and that engagement will continue as Freeport LNG works towards the safe restart of its facility,” stated Freeport.

When the explosion occurred, Freeport’s Chairman and Chief Executive Michael Smith and his team had been planning for an expansion from 15 million tonnes per annum of output from three Trains to 20 MTPA with the construction of a fourth Train.

Customers

Freeport LNG's main customers include Japan’s largest importer JERA Co. Inc., the Japanese utilities Kansai Electric and Osaka Gas as well as South Korean company SK E&S and buyers in Europe.

During the first quarter of 2022 before the accident, the Freeport plant exported 55 cargoes mainly to import terminals in Europe and North Asia

Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired by the company to review the incident and suggest action.

Even without Freeport volumes, the amount of gas flowing to US LNG export plants hit 13.0 billion cubic feet per day last week, the most since May 2022, 10 days before the Freeport shutdown.

The Freeport closure meant the nation’s other six large-scale export plants have been operating near full capacity.

Freeport LNG has provided an update on its re-start plants stretching into the first quarter of 2023  because of repairs and production and operational changes.

JERA Co. Inc., the largest Japanese LNG buyer and power assets holder, has stated it would not be renewing long-term supply contracts for volumes from projects at Ras Laffan in Qatar amounting to 5.5 million tonnes per annum.

The contracts with Qatar are expiring at the end of the year. The deals were originally signed in 1997 and 1998 for the Qatargas 1 project.

JERA had inherited most of its worldwide contracts from Tokyo Electric Power Co. and Chubu Electric when the JERA joint venture was set up.

“Currently we are not considering contracting because we find it extremely difficult to extend the existing large contracts timing-wise,” JERA President Satoshi Onoda said of the Qatari long-term deals during a virtual conference.

The JERA President emphasized that the Tokyo-based company did not have a plan to give up all of its long-term LNG supply contracts.

Long-term portfolio

These sale and purchases agreements span liquefaction plants in Australia such as Wheatstone LNG, Darwin LNG, the FLNG Prelude plant as well as projects in Indonesia, Malaysia, Brunei and Papua New Guinea.

The Japanese company also receives cargoes from the Freeport export plant in Texas and could focus on more US volumes, as well as in the short-term spot LNG when needed.

In mid-November 2021, JERA s purchased a significant stake in Freeport LNG at Quintana Island in Texas and will invest in expansions as part of a plan to be able to direct cargoes to Japan even when global supplies are tight.

The Japanese company’s US subsidiary JERA Americas Inc., concluded a securities purchase agreement with infrastructure fund Global Infrastructure Partners to acquire around a 25.7 percent interest in Freeport for $2.5 billion.

For this transaction, JERA appointed US investment bank Goldman Sachs as its exclusive financial advisor.

The Freeport plant is located in Brazoria County, south of Houston, and is run by Chief Executive Michael Smith, an energy entrepreneur who developed the plant with almost 15 million tonnes per annum of LNG capacity.

It has use-or-pay liquefaction tolling agreements for most of the output from the three Trains with customers including JERA as well as Japanese utility Osaka Gas and European-based companies, UK major BP and German utility Uniper.

JERA noted that, together with Freeport LNG, the Japanese company has already contributed to the stable operation of Train 1 of the Freeport liquefaction project through its participation in that subsidiary.

JERA plans to work with Freeport to advance new LNG projects including production capacity expansion and the development of Train 4.

Freeport LNG, the US export plant in Quintana Island in Texas, has despatched its 100th cargo after sending out its first shipment from the former import terminal just 14 months ago.

The US Freeport LNG export plant at Quintana Island in Texas has been given three more years by the Federal Energy Regulatory Commission to complete its Train 4 expansion at the facility by May 2026.

Freeport had previously delayed its own final investment decision on building a fourth Train until 2021 because of the depressed energy markets and low prices and demand.

“As with most LNG projects around the world, Covid-19 and other market challenges have negatively impacted our development efforts,” Freeport said at the time.

Now the FERC has granted Freeport’s recently filed request for a formal delay to completion of the fourth Train at the project, led by the company’s Chief Executive, the energy entrepreneur Michael Smith.

Freeport began commercial operations in May 2020 for its third Train with liquefaction services for French major Total and South Korean utility and energy company SK E&S under their tolling agreements.

Previously, Freeport CEO Smith had said he was unsure when he would advance the Train 4 expansion as he had no firm long-term contracts in place for the fourth Train.

A preliminary agreement signed in 2018 by Japanese trading house Sumitomo Corp. for 2.2 million tonnes per annum from Train 4 expired without being finalized.

Smith cited a list of challenges facing FIDs in February 2020 before the Covid-19 shutdowns, including record low prices and weaker than expected demand in Asia. At the time Covid-19 had been confined to China.

He said this had created a perfect storm of headwinds for producers looking to construct new liquefaction plants or additional processing Trains.

The FERC said that it had issued public notice in August 2020 of the applicant’s request for an extension of time to build Train 4 and noted that no comments were filed from the public against such a move.

“Based on the facts presented in the request, the applicants are granted an extension of time until and including May 17, 2026, to complete construction of the project and make it available for service,” the FERC said in its statement.

Freeport LNG Development will now be able to go ahead in its own time to construct the additional facility in Brazoria County, Texas.

“The proposed Train 4 Project will allow the applicants to liquefy for export an additional 5.1 metric tonnes per annum of LNG or the equivalent of approximately 0.74 billion cubic feet per day of natural gas,” the FERC order stated.

More than a dozen US developers are pursuing projects for new plants or additional production capacity and have yet to announce positive FIDs.

Only Venture Global has been moving to the construction stage with two new projects in Louisiana, Calcasieu Pass and the Plaquemines facility.

The first phase construction at Freeport saw the building of three Trains and 15 MTPA of output.

The original Freeport terminal was completed in 2008 as an import facility with one berth and two storage tanks, each of 160,000 cubic metres capacity.

A second loading berth and a 165,000 cubic metres capacity full containment LNG storage tank were added. The Train 4 project is the scheduled second phase of construction.

About 13.4 MTPA of Freeport production capacity from the first three Trains has been contracted under use-or-pay liquefaction tolling agreements with customers including European and Japanese contract holders, BP of the UK, Germany’s Uniper and Japan’s Jera Co. Inc. and Osaka Gas.

The first three Trains were built by a consortium including McDermott International and Zachry Construction Corp. of the US, along with Chiyoda Corp. of Japan.

However, US engineering company KBR was selected by Freeport as the preferred bidder for the engineering, procurement, construction, and commissioning contract for the fourth-Train expansion.

Under the terms of the contract, KBR would provide EPC, commissioning and start-up of a nominal 5 MTPA LNG Train and associated gas pre-treatment plant.

There is now a question mark over that Train 4 EPC contract as KBR has said it is pulling out of lump-sum LNG and energy construction projects.

The selection of KBR was made following completion of a nine-month front-end engineering and design verification, execution planning and EPC proposal process.

May 4 (LNGJ) - Freeport LNG in Texas said it began commercial operations for its third liquefaction Train with the commencement of liquefaction services for French major Total and South Korean utility and energy company SK E&S under their tolling agreements.

   “The start of commercial operations for Freeport LNG's Train 3 marks the full commercial operation of our $13.5 billion, three-Train facility,” said Michael Smith, Freeport’s founder, Chairman and Chief Executive. “After over five-and-a-half years of construction, which began in December 2014, we are thrilled to now have all three Trains operating safely, and capable of producing in excess of 15 million tonnes per annum, “ added Smith.

The Freeport LNG export plant on Quintana Island in Texas has asked regulators to place its third liquefaction Train into service by April 30 as the US Gulf Coast export buildout continues amid the global supply glut and economic slump.

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.