US LNG WEEKLY: Freeport LNG makes progress toward resuming production

US FOB Gulf Coast cargo values fell during the week ended Jan. 31, as Freeport LNG continued to make progress toward resuming liquefaction operations after an outage at the Texas facility that has lasted nearly eight months.

According to multiple market participants, Freeport LNG may be notifying some customers of an expected production restart in February. The operator notified Texas regulators Jan. 26 that it was preparing for the sequential restart of its pretreatment trains, subject to approvals. Restart of the pretreatment trains would typically happen before liquefaction trains are restarted.

In a separate filing Jan. 30 with the US Federal Energy Regulatory Commission, Freeport LNG requested authorization to, among other things, flow hydrocarbons to Train 3 for LNG train commissioning and cooldown, so that it could resume production from the train and fill its storage tanks. It sought a response from FERC by Feb. 1.

As of Jan. 31, Freeport LNG had not yet submitted a request to the US Pipeline and Hazardous Materials Safety Administration for permission to resume production at the facility, according to a source. The three-train, 15 million mt/year capacity facility has been offline since an explosion and fire on June 8, 2022. A Freeport LNG spokesperson declined Jan. 31 to comment beyond the filings.

South Korea’s SK Group is a Freeport LNG offtaker. The facility also has offtake commitments with Japanese utilities JERA and Osaka Gas. TotalEnergies, based in France, controls over 2.2 million mt/year of LNG from the third train at Freeport LNG. On Jan, 30, JERA, Japan’s largest power generation company, said it was securing alternative LNG supplies for the current fiscal year ending in March, due to the outage at Freeport LNG.

Utilization at major US LNG export facilities edged up for the second week in a row. European interest in long-term US LNG volumes, meanwhile, remained strong.

The Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed at $14.50/MMBtu Jan. 31, down $1.05/MMBtu since the beginning of the seven-day period. During the week, on Jan. 26, GCM was assessed at $13.95/MMBtu, a nearly three-month low.

Feedgas deliveries to major US liquefaction terminals averaged around 12.45 Bcf/d for the week through Jan. 31, up slightly from 12.35 Bcf/d in the previous week, data from S&P Global Commodity Insights showed. Feedgas demand was supported by strong flows to terminals including Sempra’s Cameron LNG in Louisiana and Cheniere’s Sabine Pass in Louisiana and Corpus Christi Liquefaction in Texas.

In US market developments during the latest week, Poland’s PKN Orlen — owner of gas importer PGNiG — agreed a 1 million mt/year US LNG purchase deal with Sempra’s infrastructure unit for volumes from the proposed Port Arthur LNG export facility in Texas, the companies said Jan. 25. PKN Orlen agreed to purchase the LNG on an FOB basis for 20 years, the companies said, with first cargo deliveries expected in 2027. The first phase of the project is now fully subscribed under binding long-term agreements, Sempra said, adding that it expects to reach a final investment decision by the end of March.
Source: Platts