Freeport LNG Outlines Plan for Fourth Liquefaction Unit

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Researched by Industrial Info Resources (Sugar Land, Texas)--The ongoing shutdown of Freeport LNG's (Houston, Texas) 15 million-ton-per-year export facility in Texas will put a sizeable dent in U.S. liquefied natural gas (LNG) shipments abroad during the second half of the year, according to the U.S. Energy Information Administration's (EIA) latest energy forecast. Amid this situation, Freeport LNG continues to plan for a fourth liquefaction and production train at its Quintana site on the Texas Gulf Coast.

"For the second half of this year, we expect U.S. LNG exports will decline because of the outage at the Freeport LNG export facility, which we do not expect to return to full service until late 2022," according to the EIA's July Short Term Energy Outlook (STEO), which was released on Tuesday.

"The shutdown of Freeport LNG will reduce U.S. LNG export capacity by approximately 2 Bcf/d (billion cubic feet per day), which is about 17% of the total capacity," the STEO continued. "We forecast U.S. LNG exports to average 10.5 Bcf/d in (second-half 2022), 14% less than the forecast in our June 2022 STEO."

The Freeport LNG facility is ranked the seventh-largest in the world in terms of capacity.

For 2023, the EIA expects LNG exports will continue to grow in 2023, averaging 12.7 Bcf/d on an annual basis, 17% higher than in 2022.

An explosion and fire caused Freeport LNG to shut down its facility on June 8. The company has since said it is targeting a partial resumption of its operations in early-to-mid-October, and a restoration of full operations by the end of the year. An investigation into the cause of the blaze is underway. For more information, see July 1, 2021, article - Freeport LNG May Partially Resume Operations in October after U.S. Regulator Intervenes.

The outage also caused the EIA to lower its forecast for the Henry Hub natural gas spot price average to $5.97 per million British thermal units (Btu) for the second half of the year, down from its previous forecast of $8.58 per million Btu.

Speaking at the Economic Alliance Houston Port Region and BIC Alliance Industrial Procurement Forum Breakfast on Thursday, Mark Mallett, chief operating officer of Freeport LNG, did not divulge any new information regarding the status of the facility. However, he did talk about plans for a fourth unit at the facility, along with current market conditions.

Mallett said the company is in talks with customers regarding offtake from the proposed fourth unit, and could reach a final investment decision (FID) by late this year or early 2023. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas project and plant databases can click here for a detailed project report and click here for a plant profile.

Since July 2019, more than 440 ships have loaded at the company's Quintana facility, Mallett said. However, the destination for the LNG has changed dramatically.

In 2021, 70% of the LNG from Quintana was destined for Asia. But this year, about 80% of the LNG has been destined for European markets as a result of natural gas disruptions caused by Russia's war with Ukraine. Europe is seeking to utilize more imported LNG for its energy needs.

Also speaking at the forum was Shane Mullins, Industrial Info's vice president of Product Development, who said July marked the first month that more LNG was coming into Europe than natural gas piped in from Russia.

Mullins said a major ramp-up of LNG import infrastructure is being seen in Europe as a result of the Ukraine war. He said Industrial Info is tracking about US$8.8 billion of new LNG terminal projects in Europe.

Trey Hamblet, Industrial Info's vice president of research for Chemical Processing and Petroleum Refining, also spoke at the forum.

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