The fuel woes for America continue, as one of the largest export terminals – which specializes in liquefied natural gas – has had an explosion.
A fire ripped through the main plant of Freeport Liquefied Gas, and it is expected that it will not be operational through to September and will only run at partial capacity until the end of the year.
The Texas facility, which was severely damaged by fire and a subsequent explosion, has received so much damage that it would be impossible to be up and running any time soon.
Europe has already had a challenging time sourcing natural gas because of the war in Ukraine and the explosion caused an immediate jump in prices in Europe, while prices in the United States have slumped.
Natural News reported:
Freeport LNG’s plant singlehandedly accounts for about 20 percent of all U.S. natural gas exports, and was, up until the fire and explosion, a major supplier to European suppliers seeking alternatives to Russian gas since the February invasion.
According to the company, its Quintana, Tex.-based plant caught fire and exploded when an over-pressurized pipeline ruptured. Processing operations were not damaged, however.
The Rystad Energy consulting group says that Freeport LNG can process 2.1 billion cubic feet per day (bcfd) of natural gas into a supercooled liquid suitable for shipping. Up until the incident, it had been running near capacity.
Roughly 1.17 bcfd of Freeport LNG’s output had been going to Europe as of May, up from 0.81 bcfd in March.
“It’s very serious,” said Alex Munton, director of natural gas and LNG at Rapidan Energy, another energy consulting group.
“We now have a much larger and much more extensive outage at Freeport LNG that will remove more supply from the market than was anticipated last week.”
Because Freeport has indicated that the outage will last at least a few months, exports are expected to be reduced by 40 LNG container ships from its usual export volume, a drop of four or five million tons, out of its one hundred million ton per year market.
“We expect Europe will be the region most impacted by this incident,” Rystad analysts said.
Over the past few months, the bulk of Freeport’s exports (around 70 percent) have been sold to the European Union – with the largest buyers being The Netherlands, Turkey, and France – and Great Britain
Freeport’s processing areas, the liquefaction trains that chill the gas, storage tanks and docks were all left undamaged in the explosion and the company is investigating the situation to find out the cause.
“There is a lot of analysis to understand the problem, put in measures of safety and operational regime to make sure it doesn’t happen again,” Rapidan’s Munton said.
The United States has been in a natural gas deficit, with inventories only sitting around 300bcf below the five-year average, so the incident will mean good news for the American market, according to Al Salazar, senior vice president at Enverus Intelligence Research.
“It should be alarming to federal policymakers that the Freeport LNG terminal only exports 2 Bcfd, yet it is having such a significant impact to prices,” said Paul Cicio, chief executive of the Industrial Energy Consumers of America, a trade group that has been calling on Congress to limit expanded LNG export permits.
The group pointed out the negative impact that exporting natural gas in great volume has on the prices for American consumers.