Freeport LNG utilization hits highest level since December after latest US outage

Houston — Gas deliveries to Freeport LNG in Texas rebounded to their highest level in almost three months March 10 after dropping due to an unplanned outage involving Train 2, S&P Global Platts Analytics data showed.

The rise in utilization comes as Platts Analytics is forecasting US Gulf Coast LNG terminals to be running near full capacity through the end of 2021, based on contractual obligations and current netbacks pricing.

The benchmark Platts JKM spot LNG price for Northeast Asia was assessed 2 cents higher at $6.05/MMBtu, with buying interest firming for May, suggesting a contango market in which future prices are higher. That could be bullish for US cargoes shipped in the near term.

Feedgas demand at Freeport LNG has fluctuated significantly over the last month due to unscheduled shutdowns.

A record cold snap during mid-February in Texas affected operations at Gulf Coast liquefaction terminals, including Freeport LNG. The terminal south of Houston shut down two trains after the Texas governor asked it to conserve power ahead of the coldest day of the weather front. The third train also went down when the freezing weather forced widespread blackouts across the state.

After the weather improved, the trains were restarted and feedgas demand returned to more normal levels toward the end of February.

Then, according to an emissions filing with the Texas Commission on Environmental Quality, Train 2 experienced a trip on March 8 due to a valve malfunction on the mixed refrigerant system. The mishap resulted in unavoidable venting to the liquefaction flare.

"The plant maintenance staff worked to repair the valve to allow for the restart of Train 2 as quickly and efficiently as possible to minimize flaring," the filing said. "Vent gas emissions during this event were routed to the LQF Flare for emissions control."

A spokeswoman for the terminal, Heather Browne, declined to comment.

Feedgas deliveries to Freeport LNG on March 10 totaled 2.02 Bcf/d, the highest since Dec. 17, 2020, Platts Analytics data showed. Total US feedgas demand registered 10.35 Bcf/d on March 10, up from 9.89 Bcf/d the day before.

While Freeport LNG has delayed a final investment decision on a proposed fourth train, CEO Michael Smith said during the CERAWeek by IHS Markit energy conference earlier in March that the developer had recently seen renewed interest from buyers in long-term contracts tied to the expansion project.

A preliminary agreement signed in 2018 by Japan's Sumitomo for the purchase of 2.2 million mt/year of LNG from Train 4 expired without being finalized.