Freeport LNG Ships First Gas as Ramp-Up Continues

Freeport LNG, the second largest LNG export terminal in the U.S., reportedly shipped its first cargo in eight and a half months on Sunday, February 12. The plant had been closed since an explosion in June and is just beginning a process to ramp up operations toward resuming full operation this spring.

Reuters and S&P Global both reported that an LNG carrier chartered to BP arrived at the terminal on February 10 after having been standing by in the Gulf of Mexico. BP is one of the customers with long-term contracts with the facility. The 84,550 dwt Kmarin Diamond registered in the UK loaded from the LNG storage tanks according to a report by S&P. 

The operation started after federal regulators cleared the plant to begin shipping about two weeks after they gave the go ahead to start the plant’s cooling operations in anticipation of restarting the first train. S&P reports the LNG, which was in the tanks since the June explosion, was shipped to make space in the plant’s tanks. The vessel departed early on Sunday and is currently heading toward the Suez Canal.

Platts is reporting that a second vessel, the South Korean Prism Agility moved to the dock shortly after the vessel with the first gas shipment departed. The 97,494 dwt LNG tanker registered in Panama is currently on the dock. It is unclear when it might depart.

Federal regulators had given permission on February 9 for the loading operations to resume. Reuters’ data shows that at least three additional tankers are waiting in the Gulf of Mexico. Further, they believe that several additional vessels are now on their way to the facility.

Freeport LNG in its previous updates said that it would be a gradual process to resume operations now that all the repairs had been made to the plant and an agreement reached with the regulators on future steps including an increased manning and training for the plant’s management. The independent report said operators missed warning signs when they isolated a piping segment containing cryogenic liquefied natural gas which lacked the proper overpressure protection. A pressure safety valve testing procedure and car seal program were found to have deficiencies along with temperature indicator alarms that could have been used to warn operators of increasing temperatures in LNG piping during operations. The explosion was caused as the gas came in contact with sections of the piping at ambient temperature.

The plant had to delay its restart on several occasions as they worked to complete repairs and undergo regulatory review. Analysts point out that the plant requires additional approvals to resume full production. Freeport in its last update said the ramp-up would require weeks projecting it would last at least into March.

Warn winter temperatures have helped to stabilize the overall market for LNG and keep prices lower from their peak in 2022. S&P reported a small movement in the price of LNG as the plant which ultimately has 2.1 billion cubic feet per day of capacity begins to draw more gas. The restart comes as the U.S. has emerged as one of the leading exporters of LNG competing with Qatar for the highest volumes.