LNG

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.

JERA Co. Inc., Japan’s biggest liquefied natural gas importer and utility company, has approved a deal to sell part of its stake in the Freeport LNG export plant in Texas to another Japanese company.

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.

The US Pipeline Hazardous Materials Safety Administration (PHMSA) said it would still take several months for the Freeport liquefied natural gas export plant to fully ramp up and to bring all processing Trains and other facilities on stream.

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.

US export plant Freeport LNG in Texas plans to undertake a facility overhaul of work and safety methods as it prepared to return to full production ramp-up by March 2023 after the shut-down caused by the June 8 fire in 2022.

Freeport LNG, the operating company for the liquefaction and export plant at Quintana Island in Texas, issued a long-awaited update to the June 8 incident and said most of the plant was expected to be closed for three months.

An investigation is under way into the explosion at the Freeport liquefied natural gas export plant at Quintana Island in Texas that could reduce US Gulf Coast cargo shipments for up to three weeks, though the overall damage was now said to be limited.