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Freeport LNG Remains Under Spotlight of Global Market

Freeport LNG remains under the spotlight of the global market. That’s what Rystad Energy Vice President Wei Xiong said in a Rystad gas and LNG market update sent to Rigzone on Thursday by the Rystad team, noting that the U.S. liquefaction plant “halted operations before Hurricane Beryl’s arrival along the U.S. Gulf Coast a week earlier”.

“The facility’s longer than expected closure has restoked some concern over global liquefied natural gas supply risk, despite the remaining U.S. liquefaction capacities being largely unaffected by the hurricane,” Xiong added. In the update, Xiong highlighted that Freeport went offline on July 7 before Hurricane Beryl made landfall in Texas. “Some equipment of the facility was damaged by the hurricane and is being repaired, according to an announcement by Freeport LNG,” Xiong said in the update.

“The terminal plans to resume operations of one of its three trains this week, with a capacity of 5.1 million tons per annum (Mtpa). There is, however, uncertainty about the timeline of the resumption of another two trains,” Xiong added. “Feedgas flows to the terminal remained at minimal levels of only 8.7 million cubic feet per day (Mcfd) on 14 July, compared to nearly 2 billion cubic feet per day (Bcfd) on 6 July before the hurricane’s arrival, indicating the facility was still offline last weekend,” Xiong continued.

The Rystad Energy VP highlighted in the update that data from Rystad Energy LNG Vessel Tracker indicates that four vessels are currently waiting outside Freeport LNG. “The terminal has seen extensive outages in recent years, including a near 10-month shutdown from mid-2022 to the first quarter of 2023 due to an explosion, while there have also been noticeable outages this year,” Xiong said in the update. “Nearly 9 million tons (Mt), 2.9 Mt, and 3.2 Mt of production losses occurred in 2022, 2023, and 2024 year to date, respectively, due to Freeport LNG’s downtime,” Xiong added.

“Given its record of impacts, the prolonged restart this time and uncertainty about its full resumption have raised fresh concerns over U.S. LNG supply risk,” Xiong continued. The Rystad VP noted in the update that reduced gas flows to LNG export terminals, high gas storage, and increased dry gas production dragged down the Henry Hub price by 6.66 percent week on week from £2.344 per MMBtu to £2.188 per MMBtu on 16 July.

“U.S. gas storage speeded up injections, up 65 billion cubic feet (Bcf) week on week to 3,199 Bcf for the week ending 5 July,” Xiong said in the update. “This is 19 percent higher than the five-year average and 10 percent higher than the same period of last year. In the meantime, U.S.

Lower 48 daily dry gas production has averaged 102.2 Bcfd in July month to date, at a similar level to June, which registered 102.3 Bcfd, compared to 101.3 Bcfd in May,” Xiong added. “These downsides have largely offset the limited upside from heatwaves, also seen in Europe and North Asia, which lifted gas-for-power demand in the United States. Gas consumption in the power sector spiked to a record high of 54.52 Bcfd on 9 July,” Xiong continued.

“Higher than normal temperatures in the Pacific region are expected to last until late July.Summer weather is the main factor to watch out for in the coming weeks, in addition to the restart timeline of Freeport LNG,” Xiong went on to state. In the update, Xiong said supply risk surrounding Freeport LNG has driven European gas prices to rebound from a near two-month low, “as the U.S. liquefaction plant has been one of the main sources of Europe’s LNG flows”. “Nearly 5.4 percent of Europe’s LNG imports in 2023, equivalent to 6.35 Mt, came from Freeport LNG.

Data for the year to date shows 2.58 Mt of LNG flows from Freeport LNG to Europe, accounting for 4.6 percent of Europe’s LNG imports in the same period,” Xiong said in the update. “Another upside comes from heatwaves in Southern Europe. Many Italian cities have issued emergency heat alerts, as temperatures could rise above 40 degrees Celsius.

Above-normal temperatures in Italy and Greece are expected to last until early August,” Xiong added. “Given overall brimming supplies in Europe, the bullish factors may not be able to lend lasting support on prices,” Xiong warned. Xiong highlighted in the update that the Title Transfer Facility (TTF) price in Europe rose 4.67 percent week on week from EUR31.335 (£34.26) per megawatt-hour (MWh) to EUR32.797 per MWh on 16 July.

Rigzone asked Freeport LNG when the liquefaction plant will resume full operations and for comment on Rystad’s gas and LNG market update. In response, a Freeport LNG spokesperson told Rigzone, “we are safely progressing our efforts towards the phased restart of our liquefaction operations”. “We are completing initial repairs on the damage sustained to our fin fan air coolers in the hurricane and anticipate restarting the first train this week.

We plan to restart the remaining two trains shortly thereafter,” the spokesperson added. “Production levels after restart will be at reduced rates for a period of time as we continue repairs while operating the facility. Production will steadily ramp up to full rates as these repairs are completed,” the spokesperson continued.

The spokesperson told Rigzone that the company has no comment beyond this information. In a Rystad Energy market update sent to Rigzone on July 9 by the Rystad team, Rystad Energy Global Market Analysis Director Claudio Galimberti said Beryl had had a limited impact on production and refining assets[1]. At one point, more than 2.34 million electric customers in Texas, more than 23,000 electric customers in Louisiana, and more than 15,000 electric customers in Arkansas were without power, according to the PowerOutage.us website.

The site describes itself as an ongoing project created to track, record, and aggregate power outages across the United States. At Hurricane Beryl’s peak on July 8, 15 production platforms were evacuated[2] and shut-in production reached 151,306 barrels of oil per day and 154 million cubic feet of gas per day, a post on the X page of the Bureau of Safety and Environmental Enforcement (BSEE) revealed. BSEE describes itself as the lead U.S. agency charged with improving safety and ensuring environmental protection related to the oil and natural gas industry on the U.S.

Outer Continental Shelf.

To contact the author, email [email protected][3]

References

  1. ^ Beryl had had a limited impact on production and refining assets (www.rigzone.com)
  2. ^ 15 production platforms were evacuated (www.rigzone.com)
  3. ^ [email protected] (www.rigzone.com)