Freeport Restart Likely Delayed to Januaryy

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Freeport has not even been able to provide a restart plan that incorporates lessons learned from from the failures that caused the Jun. 8 explosion. "The ball is in Freeport's court to get that restart plan finished," Kruse told Energy Intelligence, basing his view on meeting readouts from recent Federal Energy Regulatory Commission (FERC) filings.


Freeport LNG is not likely to return to service until at least January, two months later than the company's most recent target date. But given the dramatic changes in the LNG market since the 15 million tons per year (2.1 Bcf/d) export plant went offline, it's unclear how much market impact the delay will have.

"Early January is our guess," said Gary Kruse, managing director of research at DC-based consultancy Arbo, who closely follows US energy regulatory matters. A previous company forecast for a mid-November ramp-up no longer appears likely.
 
Freeport has not even been able to provide a restart plan that incorporates lessons learned from from the failures that caused the Jun. 8 explosion. "The ball is in Freeport's court to get that restart plan finished," Kruse told Energy Intelligence, basing his view on meeting readouts from recent Federal Energy Regulatory Commission (FERC) filings.
 
He said that after a completed restart plan, it would take about 30 days for regulators to decide whether it is adequate, then another 15-30 days for Freeport to implement the plan. "They would have to recommission the facility, essentially" to test a lot of the systems and prove that they weren't damaged, Kruse said.
 
According to a regulatory filing, FERC staff participated in a call Nov. 3 with the US Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA), along with Freeport LNG representatives. The call was used to discuss current activities at the Texas Gulf Coast site, "including ongoing damage assessments, repair work plans and plans for restart." FERC and
PHMSA are the primary agencies that must approve the restart.
 
Freeport "indicated that remedial work plans and proposals are currently being developed that will include information on how [Freeport] intends to address the recommendations resulting from the root cause investigation report," the filing said.
 
That investigation was completed in 90 days, which impressed Kruse, who suggested the conclusion was "user error" of some kind.
 
Cargoes Await
In its latest statement, Freeport said it "continues to progress our work toward achieving the safe restart of our liquefaction facility this month," adding that "work includes completing the final repair and restoration efforts, completing required work plans and obtaining the necessary regulatory approvals required before safely restarting the facility."
 
Meanwhile, Kpler forecasts that four LNG carriers arriving at Freeport toward the latter part of November, including one at press time. Yet Kruse said that seems highly unlikely — especially given that Refinitiv data shows zero feedgas supply for the plant since June except for a 21-day period in July-August in which a small amount of gas was brought in for power generation.
 
Good Timing?
Freeport is expected to re-enter US and world gas markets that have changed significantly since the Jun. 8 explosion.
 
Freeport's outage happened at the start of summer gas storage builds on both sides of the Atlantic, and it led to a collapse in US gas futures prices as more supply was suddenly on hand. It upended markets abroad, sending European gas prices skyrocketing to record levels as the continent was nearer the beginning of an already steep uphill battle to fill gas storage for winter to create a buffer to Russian supply cuts.
 
But since Freeport went offline, the market has loosened considerably, and the storage buildout on both sides of the Atlantic is largely ready for winter. As a result, European LNG imports now facing significant bottlenecks in the form of full storage tanks and ships being used as floating storage.
 
Freeport's absence appears to have been fortuitously timed to avoid the European bottlenecks. Similar luck seems to have also favored the Cove Point LNG export terminal in Maryland when it returned from planned maintenance at the end of October.
 
Going forward, Freeport will now likely reenter world gas markets at the height of the Northern Hemisphere winter, adding extra momentum to winter US domestic gas prices while potentially providing some price relief to European countries facing winter without Russian gas supplies.

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