Gas Starts to Flow to Freeport LNG Export Plant in Texas

Freeport LNG’s long-shut liquefied natural gas (LNG) export plant in Texas was on track to receive natural gas on Tuesday, according to data from Refinitiv, a possible sign the plant might meet the company’s projected end-of-the-year return date.

The Freeport shutdown added to the squeeze on global gas caused by Russia’s invasion of Ukraine. It helped boost prices in Europe and Asia to record highs over the summer, while capping gains in U.S. gas futures by leaving more fuel in the United States for domestic use.

Refinitiv said Freeport was on track to receive about 25 million cubic feet per day (mmcfd) of pipeline feedgas on Dec. 20.

That would be the first gas to flow to the plant since August when Freeport pulled in around 22 mmcfd of gas to fuel a power plant generating electricity that sold to the Texas power grid during a heat wave.

Some energy traders guessed Freeport was again using the gas to fuel a power plant.

Freeport had no comment on the gas flows, but did repeat its recent comments that the plant is on track to restart around the end of the year, pending regulatory approval. That restart timeline, however, has already been delayed from October to November to December.

Many analysts, however, do not expect Freeport to return until the first quarter of 2023 because the company still has a lot of work to do to satisfy federal regulators before the plant is ready to restart.

Whenever Freeport returns, U.S. demand for gas will jump. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG, which is about 2% of U.S. daily production.

Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired to review the incident and suggest action.

A couple of vessels - Prism Diversity and Prism Courage - have been waiting in the Gulf of Mexico to pick up LNG from Freeport since at least early November.

Several other ships were also sailing toward the plant, including Elisa Larus, which is expected to arrive in late December, Point Fortin and Prism Agility (early January), Kmarin Diamond (mid-January) and Wilforce (late January).

Even without Freeport, the amount of gas flowing to U.S. LNG export plants hit 13.0 bcfd last week, the most since May 29 - 10 days before Freeport shut. That is because the nation’s six other big export plants were operating near full capacity.

(Reuters - Reporting by Scott DiSavino; Editing by Kirsten Donovan and Mark Porter)