The global liquefied natural gas market is set to tighten considerably after the Freeport LNG fire last week.
Hopes for a relatively quick restart were dashed by the company today, which said it hopes for a 'partial' restart in 90 days and that full operations won't resume until 'late 2022'.
The plant exports 2 billion cubic feet per day of LNG out of about 15 Bcf total in the US.
Instead of being exported, that gas will now remain at home in the US. It will help to loosen the domestic market but will tighten global LNG, meaning higher prices in Europe and Asia.
Company statement:
on June 8, 2022, an incident occurred at the Freeport LNG liquefaction plant on Quintana Island, Texas that resulted in the release of LNG, leading to the formation and ignition of a natural gas vapor cloud, and subsequent fire at the facility. As reported previously, there were no injuries, and at no time did the incident pose a threat to the surrounding community. In accordance with Freeport LNG's safety design parameters, the LNG vapor cloud dispersion and ignition thereof were at all times contained within the fence line of the liquefaction facility, lasting approximately 10 seconds. The fire and associated smoke visible thereafter were from the burning of materials in and around the location where the incident occurred, such as piping insulation and cabling.
...
Preliminary observations suggest that the incident resulted from the overpressure and rupture of a segment of an LNG transfer line, leading to the rapid flashing of LNG and the release and ignition of the natural gas vapor cloud. Additional investigation is underway to determine the underlying precipitating events that enabled the overpressure conditions in the LNG piping.
At this time, completion of all necessary repairs and a return to full plant operations is not expected until late 2022. Given the relatively contained area of the facility physically impacted by the incident, a resumption of partial operations is targeted to be achieved in approximately 90 days, once the safety and security of doing so can be assured, and all regulatory clearances are obtained.
/EUR
