The second-largest liquefied natural gas export facility in the United States will not be allowed to restart operations until it resolves public safety risks, pipeline regulators said, further delaying Biden administration efforts to ship LNG to energy-starved Europe until at least October.
The Freeport LNG terminal in Texas suffered an unexplained explosion last month, knocking out much of America’s export capacity and raising prices for gas abroad.
“Continued operation of Freeport’s LNG export facility without corrective measures may pose an integrity risk to public safety, property or the environment,” the U.S. Pipeline and Hazardous Materials Safety Administration, also known as PHMSA, said in a preliminary report published Thursday.
In its report, PHMSA laid out a series of steps the Gulf Coast facility must take to review and repair the damage, including hiring third-party investigators to assess the damage to the terminal and review the state of its LNG storage tanks. Freeport must also establish a plan to resume service, regulators said.
Freeport said Thursday it would continue working to obtain the necessary approvals and finish conducting the root cause analysis. It said it is on track to restart operations partially in early October, and it expects full production to resume by the end of the year.
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The company did not provide any updates as to the cause of the explosion at the 2 billion cubic feet-per-day liquefaction terminal, which remains under investigation.
The suspension at the Freeport facility has affected an estimated 14% of U.S. LNG exports in the short term.
The nearly monthlong outage also sent U.S. natural gas prices falling by 33% in June, the biggest monthlong price drop since 2018, due to the reduction in demand for gas at the terminal, adding even more pressure to European gas prices at a time of already limited supply.
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The U.S. Energy Information Administration most recently forecast U.S. LNG exports to average 11.7 bcf per day during the second and third quarters and 11.9 bcf per day for all of 2022, but those latest estimates were completed at the beginning of June, before the blast at Freeport, and will surely fall.
