Gas Starts to Flow to Freeport LNG Export Plant in Texas

(Reuters) — 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 TRNLTTFMc1 and Asia JKMc1 to record highs over the summer, while capping gains in U.S. gas futures NGc1 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 (MMcf/d) 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 MMcf/d of gas to fuel a power plant generating electricity that sold to the Texas power grid during a heat wave.

Officials at Freeport were not immediately available for comment on Tuesday.

After several delays from October to November to December, the company has said several times this month that Freeport is on track to restart by the end of the year.

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 (Bcf/d) 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 Bcf/d 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.

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