Texas Tanker Bottleneck Grows Amid Slow Freeport LNG Restart After Hurricane Beryl

(Reuters) — The number of liquefied natural gas (LNG) tankers waiting to load at Freeport LNG in Texas has increased since the U.S. second largest exporter of the supercooled gas halted processing ahead of Hurricane Beryl's landfall last week, according to shipping data on Thursday.

Beryl made landfall on July 8 near Matagorda, on the Texas coast, lashing the state with 80-mph (130-kph) winds that caused infrastructure damage and left more than 2 million customers without electricity for days.

Ports and energy companies in many coastal cities, including Freeport, suffered wind damage and slow restoration of power.

Freeport LNG, which shut its three liquefaction trains on July 7 and reported wind damage after, has had a slow operational restart since.

The LNG exporter said on Monday it plans to restart one processing train this week and the remaining two trains shortly after, but production will be reduced while it continues repairs.

U.S. gas futures NGc1 had dropped about 7% on Monday to a 10-week low after it became clear to the market that Freeport LNG would likely continue to operate at less than full capacity for several more days.

On Thursday, the facility was increasing production with it expected to use 500 million cubic feet of gas, up from 400 MMcf on Wednesday, according to LSEG data.

However, vessel loading has not resumed. A total of six empty LNG tankers were anchored near the port, with some of them accumulating more than 10 days of wait, according to LSEG.

As of Thursday, Freeport LNG had not distributed any instructions to bring tankers into its berths, even though there were some vessels in schedule, a source familiar with the company's operations said.

The Port of Freeport last week reopened the navigation channel, but draft restrictions for vessels remain, the Brazos Pilots Association said.

Long waits for vessels that have back-to-back contracts tend to lead to cargo cancellations.

Freeport LNG has canceled at least 10 cargoes for loading through August, Bloomberg reported, citing traders familiar with the matter.

Freeport LNG said on Thursday it would not comment on its commercial activity, including cargoes.

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