Will Freeport LNG Restart Production by Year's End?

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Researched by Industrial Info Resources (Sugar Land, Texas)--Since June 8, when Freeport LNG's (Houston, Texas) liquefied natural gas (LNG) plant on the Texas Gulf Coast shut down due to an explosion and fire, the question has loomed: When will the plant restart? And while there has been much speculation by analysts and missed restart targets from the company, the answer to the question remains elusive.

And it's an important question. The Freeport plant, when running at full capacity, can process about 2.1 billion cubic feet per day of natural gas, accounting for about 2% of total U.S. gas production and 15 million tonnes of LNG per year. Once the plant starts operating again, the increased demand will almost certainly push up U.S. natural gas prices, especially as Venture Global LNG (Arlington, Virginia) wraps up Phase II construction of its Calcasieu Pass plant in Louisiana. Construction on the four production modules began last year, and upon completion, planned for early next year, the second phase will add an additional 5 million metric tonnes of LNG production capacity to the plant. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can click here for the project report.

Subscribers to Industrial Info's Production Plant Database can click here for the Freeport plant profile.

There are a few hints that production could return at the plant reasonably soon, but restart plans also are facing headwinds. According to Reuters, using Refinitiv data, gas flows were set to resume to the plant on Monday, at 25 million cubic feet per day, but the company was unavailable to comment on why this is happening.

According to shipping data from Kpler, five LNG vessels declared the Freeport plant their destination last week. The ships will join two other LNG carriers that have been there since November, awaiting the plant's return to production.

So gas flows are picking up, and LNG vessels are ready and waiting. What are the headwinds? One of the most recent occurred early last week when the U.S. Federal Energy Regulatory Commission (FERC) sent Freeport a list of 64 items that required additional information and documents following a November 30 visit by FERC, the U.S. Coast Guard and the U.S. Pipeline Hazardous Materials Safety Administration. According to news media, the agency requested information about items such as safety protocols, personnel changes and unfinished items seen at its last visit, including repair and recalibration of the facility's gas and temperature detectors. An accompanying letter said any restart authorization "will only be granted following the review of filed responses ... and documentation that acceptable measures have been put into place to safely return the facilities to operation."

Despite the information request, Freeport LNG still seems to be aiming for a late December restart. However, some analysts aren't so sure. Clark Williams-Derry, an energy finance analyst for the Institute of Energy Economics and Financial Analysis, told the Houston Chronicle, "FERC's questions aren't window dressing. Many are big and substantive. Answering them will involve coordination and reporting by facilities, process and safety engineers." The upcoming holidays could cause some delay in both Freeport's responses and FERC's ability to analyze them.

Despite its plans for a December restart, one should keep in mind that Freeport has pushed back the planned restart date at least three times since the plant fire. And an email by a company spokesperson to the Chronicle seems to shift the time of the restart at least partially into the regulators' hands. "We continue to work towards the safe, initial restart of our liquefaction facility, which is targeted for around year end, provided we obtain the necessary regulatory approvals required for the restart of our facility," says the email.

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).