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The operator of one of the nation’s largest liquefied natural gas terminals said it doesn’t expect to be fully operational again until “late 2022” following a June 8 explosion, worsening the outlook for European buyers seeking to displace Russian energy imports.
Freeport LNG had previously set the timeline at about three weeks in the wake of the incident, which immediately took all of its approximately 2 billion cubic feet per day of capacity offline. The company now says it is shooting to resume operations at least partially within approximately 90 days.
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The longer timeline puts further strain on buyers in Europe, who have sought out more LNG from the U.S. and other countries since the war in Ukraine began, their motivation being to reduce dependence on Russian supplies and to increase storage levels ahead of winter.
European energy companies have been entering new contracts with U.S. LNG suppliers and buying up LNG on the spot market. The U.S. exported 74% of its LNG to Europe through April, as compared with 2021’s annual average of 34%, according to Energy Information Administration data.
Freeport has been a major contributor to higher European imports. Its Europe-bound volumes have risen from about 0.81 billion cubic feet per day in March to 1.17 billion cubic feet per day in May, according to analytics firm Rystad Energy.
The company’s amended timeline sent U.S. natural gas futures plunging on Tuesday, while prices on the European benchmark Dutch TTF rose considerably.
The company acknowledged the effects of the outage in its announcement, saying it is “mindful of the impact this incident and our suspension of operations has on our personnel, our surrounding community, and the domestic and international gas and LNG markets.”
Freeport also offered new details about the nature of the explosion. The company said its preliminary determination is that one of the facility’s LNG transfer lines was overpressured and ruptured, which caused a “rapid flashing of LNG and the release and ignition of the natural gas vapor cloud.”
It explained further that none of its liquefaction trains, LNG storage tanks, dock facilities, or LNG process areas were affected by the blast.
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Nobody was injured in the explosion, and the crews extinguished the fire 40 minutes after it started, the company said. It is investigating what conditions led to the explosion.
