US Freeport LNG in Texas offline at least three weeks after fire

HOUSTON (ICIS)–A fire broke out at the three-train Freeport LNG plant on Quintana Island, Texas, on 8 June, which drew emergency responders for hours and sent the US Henry Hub gas benchmark plunging on concerns of a prolonged outage of at least three weeks.

“An incident occurred at the Freeport LNG facility on Quintana Island at about 11:40 a.m. There were no injuries, all employees and contractors have been accounted for and there is no risk to the surrounding community. The incident investigation will continue,” according to a statement from a Freeport LNG spokeswoman on 8 June.

Fire authorities from the local communities, including the local Surfside police marine division, responded, as well as the US Coast Guard, which set up a 2-mile safety zone perimeter prohibiting vessels from approaching the plant.

The LNG plant will be out of action for at least three weeks after a fire earlier June 8, according to the liquefaction plant’s operator.

Freeport LNG said in an emailed statement that the three train facility was “currently shut down and will remain shut down for a minimum of three weeks.”

The 174,000cbm Elisa Larus was loading at the facility when the fire broke out.

Following the incident, power line readings to the plant went down to zero, according to sources.

Power provider CenterPoint Energy declined to comment and referred all questions to Freeport LNG.

At around 2 p.m. local time, the fire was extinguished at the facility, a US Coast Guard spokesman said.

The Elisa Larus was moved out of the way to allow for other emergency response vessels to maneuver but the vessel itself did not seem to be part of the fire, the spokesman said.

As the Elisa Larus had arrived at around 8 a.m. local time on 8 June, it did not appear likely that the vessel was able to finish loading before the incident occurred. The vessel moved away from the facility by the afternoon but its immediate destination was not clear.

As of 8 June, the 160,000cbm Cool Runner, chartered by Equinor, was likely the next approaching vessel to Freeport LNG but remained positioned offshore and slowed its speed following the incident.

Market sources said that based on video footage of the plant that was aired through local television stations, it did not appear that the fire had any immediate impact on the plant’s storage tanks or liquefaction trains.

However, the operational impact and length of regulatory review of the damage is yet to be determined.

The Pipeline and Hazardous Materials Safety Administration (PHMSA), which is part of the US Department of Transportation, was notified of the incident and an investigator has been dispatched to Freeport.

The Federal Energy Regulatory Commission (FERC), which oversees the permitting and siting of LNG export plants, as well as interstate natural gas pipelines, would also have regulatory review of the incident and work alongside PHMSA.

GAS IMPACT

On 8 June US natural gas futures shed more than 6% from the prior settlement on 8 June amid concerns of a prolonged outage that would lower demand for feedgas to the plant.

The July ’22 front-month contract settled at $8.70/MMBtu on 8 June. The Henry Hub benchmark climbed as high as $9.32/MMBtu at the start of the week on higher summer demand.

US Boardwalk’s Gulf South natural gas pipeline issued a critical notice on 8 June citing an “unplanned disruption” at Freeport LNG, stating that current flow rates to the plant from Gulf South are at zero and future cycles would be evaluated.

PLANT HISTORY

Freeport LNG last underwent a prolonged 26-day turnaround in April between 5 and 30 April. At the time, the work was being completed to address some previous issues at the plant’s pre-processing facility.

Since October 2021, the operations at Freeport LNG have encountered multiple outages related to feedgas quality into the plant.

Sources at the time said the issue was the quality of feedgas fed from various pipelines into the plant that were causing different buildup of material into the pre-processing facility.

This led to frequent shutdowns and restarts of the plant, as well as some cargoes that were either short-loaded or rescheduled.

Since June 2021, US LNG plant utilisation has been running high due to the elevated prices and demand in Europe and Asia. This has led to some sources to speculate whether regular planned maintenance in the US could have been deferred as a result or whether maintenance overhauls are more frequently needed given the high run rates.

FREEPORT CUSTOMERS

Freeport LNG is capable of producing 15mtpa and is contracted for longterm capacity at close to 13.9mtpa. Its feedgas accounts for just under 2% of marketed US production, according to Energy Information Administration (EIA) figures for 2022.

The main offtakers at Freeport LNG are Japanese buyers Osaka Gas and JERA, UK-based BP, France-based TotalEnergies and South Korea’s SK E&S.

Elisa Larus is under charter to European company EDF, which has a joint agreement with JERA on Atlantic LNG volumes.