15 November | Regulation

Major U.S. LNG terminal may not resume by year-end

The Freeport LNG plant has told customers that it will likely cancel deliveries scheduled for November and December because repairs and regulatory approvals have not yet been completed.

The Freeport, Texas, LNG export facility, which previously accounted for about 15% of U.S. liquefied blue fuel exports, was de-energized in June due to an explosion followed by a fire. Since then, the plant's fate has haunted gas traders. U.S. gas prices have fallen after rumors that repairs may take longer than expected.

Due to lower LNG prices due to a temporary glut ahead of winter for the Northern Hemisphere, a prolonged shutdown could again contribute to market congestion, complicating Europe's efforts to replace Russian pipeline gas. Thus, the longer an export plant is out of service, the more gas will accumulate in the U.S., putting pressure on domestic prices.

Last week, Freeport said it might restart the plant this month. Shortly thereafter, however, the company notified customers that the plant's startup would be postponed indefinitely. There have been no additional announcements regarding the anticipated restart date. 

Freeport LNG spokeswoman Heather Browne said their preparations to activate the plant are still ongoing. They need to get the necessary regulatory approvals in order to do so. 

Either way, Freeport must first submit its restart plan to the Pipeline and Hazardous Materials Safety Administration before it can resume operations. According to Wood Mackenzie Ltd. the permitting process could take at least one or two weeks. Either way, the plant definitely won't be up and running until December.

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