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Released April 25, 2024 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--A vessel partially laden with liquefied natural gas (LNG) left the Freeport LNG export terminal in Texas on Tuesday, the first such shipment in nearly two weeks, vessel tracking data show.
The Reuters news service said it had data from financial firm LSEG that showed the Pavilion Leeara left Freeport on Tuesday, the first such receipt since April 11. That shows the troubled facility is resuming activity months after it was plagued by operational outages.
Freeport, one of the largest export terminals in the U.S., can receive up to 2 billion cubic feet (Bcf/d) of natural gas, primarily taken from the inland shale basins. Operations, however, have been problematic.
An over-pressurized pipe triggered an explosion and fire in June 2022 that hobbled the facility for much of the year. Problems with some of the electric motors meant the plant was performing below peak capacity for much of 2023, while freezing temperatures in January of this year left it facing technical challenges for weeks. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Plant Database can click here for the plant profile.
The outages have curbed the LNG export potential from the U.S. Data from the federal government show 21 vessels laden with LNG departed U.S. export terminals during the seven-day period ending April 17, carrying a combined 79 billion cubic feet of product.
During the similar week last year, 24 vessels departed, carrying a combined 90 billion cubic feet of LNG. Reuters reported that feedstocks into Freeport are well below normal, with the facility handling about half of its normal deliveries.
Gas markets are nonetheless adequately supplied and demand is low due in part to seasonal factors. Henry Hub, the U.S. benchmark for the price of natural gas, was trading at around $2 per million British thermal units (mmBtu) on Wednesday. The price is down some 18% since the start of the year and far below $9/mmBtu seen shortly after Russian forces invaded Ukraine in early 2022.
At its peak, Freeport accounted for about 20% of total U.S. LNG exports, helping to offset a geopolitical risk premium for natural gas by serving as a stopgap in the European market. Before the war, Russia was a main supplier of natural gas, though sanctions left the region scrambling for new resources from friendlier nations.
Lower prices, meanwhile, could lead to lower production in some basins. A drilling report from the government predicts that gas production will decline in five of the seven primary shale basins in May. Total gas production is expected to drop from about 100 Bcf/d in April to 99 Bcf/d, with the Haynesville Shale, straddling the borders of Louisiana and Texas, experiencing the bulk of the decline.
The U.S. first exported LNG in 2016 and is now among the largest exporters in the world, rivalling the likes of Qatar and Australia. The government expects exports to average 12 Bcf/d in 2024 and increase to 14 Bcf/d on average next year.
The Sabine Pass terminal in Texas is typically the nation's busiest export terminal.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The Reuters news service said it had data from financial firm LSEG that showed the Pavilion Leeara left Freeport on Tuesday, the first such receipt since April 11. That shows the troubled facility is resuming activity months after it was plagued by operational outages.
Freeport, one of the largest export terminals in the U.S., can receive up to 2 billion cubic feet (Bcf/d) of natural gas, primarily taken from the inland shale basins. Operations, however, have been problematic.
An over-pressurized pipe triggered an explosion and fire in June 2022 that hobbled the facility for much of the year. Problems with some of the electric motors meant the plant was performing below peak capacity for much of 2023, while freezing temperatures in January of this year left it facing technical challenges for weeks. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Plant Database can click here for the plant profile.
The outages have curbed the LNG export potential from the U.S. Data from the federal government show 21 vessels laden with LNG departed U.S. export terminals during the seven-day period ending April 17, carrying a combined 79 billion cubic feet of product.
During the similar week last year, 24 vessels departed, carrying a combined 90 billion cubic feet of LNG. Reuters reported that feedstocks into Freeport are well below normal, with the facility handling about half of its normal deliveries.
Gas markets are nonetheless adequately supplied and demand is low due in part to seasonal factors. Henry Hub, the U.S. benchmark for the price of natural gas, was trading at around $2 per million British thermal units (mmBtu) on Wednesday. The price is down some 18% since the start of the year and far below $9/mmBtu seen shortly after Russian forces invaded Ukraine in early 2022.
At its peak, Freeport accounted for about 20% of total U.S. LNG exports, helping to offset a geopolitical risk premium for natural gas by serving as a stopgap in the European market. Before the war, Russia was a main supplier of natural gas, though sanctions left the region scrambling for new resources from friendlier nations.
Lower prices, meanwhile, could lead to lower production in some basins. A drilling report from the government predicts that gas production will decline in five of the seven primary shale basins in May. Total gas production is expected to drop from about 100 Bcf/d in April to 99 Bcf/d, with the Haynesville Shale, straddling the borders of Louisiana and Texas, experiencing the bulk of the decline.
The U.S. first exported LNG in 2016 and is now among the largest exporters in the world, rivalling the likes of Qatar and Australia. The government expects exports to average 12 Bcf/d in 2024 and increase to 14 Bcf/d on average next year.
The Sabine Pass terminal in Texas is typically the nation's busiest export terminal.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
