Another Production Restart Delay For Freeport LNG

Reuters, December 2, 2022

Freeport LNG on Friday again delayed the restart of the second-biggest U.S. liquefied natural gas (LNG) export facility, moving its forecast for resuming processing to year's end, pending regulatory approval.

Freeport LNG shut the Texas plant on June 8 after an explosion and fire that energy consultants said resulted from inadequate operating and testing procedures, human error and fatigue.

Last month, the closely-held company said it was on track to restart the plant in mid December and would get most of its 15 million tonnes per annum production back by January with a return to full service in March.

"Based upon current progress, and subject to us continuing to meet necessary regulatory requirements, we now anticipate that the restart of our liquefaction facility to be achieved around year end," Freeport LNG spokesperson Heather Browne told Reuters in an email.

A delayed restart of the plant would leave less fuel for European countries seeking to replace Russian gas. Russia has slashed exports to European Union buyers in response to sanctions placed on Moscow for its invasion of Ukraine.

Any restart must be approved by U.S. safety regulator Pipeline and Hazardous Materials Safety Administration (PHMSA), which has not yet signed off on a complete repair plan.

Freeport LNG's official Remedial Work Plan remains a "work in progress" and the company has not yet made a request to resume normal operations, PHMSA said. The regulator could not estimate how long an evaluation of the request would take.

Analysts have said it could take until January or February for PHMSA to review and approve any restart request and for Freeport to complete the needed work.

Alex Munton, a director at energy consultancy Rapidan Energy Group, has said a resumption of gas processing at Freeport would likely not happen until the first quarter of next year "with longer delays possible."

The company has missed its target several times. In June, it predicted an October restart, followed by November, followed by mid-December and now late December.

The shutdown has forced big customers including JERA and Osaka Gas to book hundreds of millions of dollars of losses because they had to buy expensive LNG elsewhere to supply their customers.

Other Freeport LNG customers include BP, TotalEnergies, and SK E&S.

(Reporting by Kavya Guduru and Scott DiSavino; Editing by Marguerita Choy)

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