Widespread power outages among obstacles to speedy US Gulf Coast LNG recovery

Houston — Sempra Energy's Cameron LNG terminal could be offline for an indefinite period based on reports from the operator and shipping officials about the continued lack of power and other services in the Lake Charles, Louisiana, area following Hurricane Laura.

The Hackberry export terminal relies on power purchased from utility Entergy and could be further hampered by major power outages across Cameron Parish. Cheniere Energy's nearby Sabine Pass terminal, which was also still offline Sept. 2, produces its power on-site and could potentially be back up and running more quickly.

S&P Global Platts Analytics estimates roughly 18.4 Bcf — roughly five cargoes — of Louisiana LNG production has been curtailed so far in the wake of the hurricane's Aug. 27 landfall. The ongoing outages at two of the biggest US liquefaction facilities come as export economics have been improving across the board, with the prompt-month US Gulf Coast netback from the Dutch TTF hub rising to nearly 16 cents/MMBtu at the start of September on the back of bullish fundamentals that have helped lift European prices. Together, Cameron LNG and Sabine Pass have the capacity to produce over 40 million mt/year of LNG from eight liquefaction trains.

"The storm's impact on the surrounding community and the local resources Cameron LNG depends on is significant," Sempra spokeswoman Anya McInnis said in an email responding to questions Sept. 2. "Cameron LNG will resume LNG production as soon as it is safe to do so."

According to a shipping advisory issued to customers that use the intracoastal waterway that serves Cameron LNG, the Lake Charles area remained without power and water Sept. 2 and recovery efforts were continuing. Traffic resumed, but was restricted, as conditions for deep draft vessels such as tankers were being assessed. Navigation aids were continuing to be impacted.

When it comes to the integrity of the equipment at the terminal following the storm, Sempra has said only that minimal flooding and no "catastrophic wind damage" was discovered during an initial evaluation of the terminal. It has not described in any detail what damage it did find, any repairs that may be needed, and what impact, if any, such efforts would have on the timing of resuming production.

At Sabine Pass, Cheniere said Aug. 31 it had begun the process of restoring operations, after finding no significant damage from Laura. It did not say, however, when production would resume, or the impact any damage it did find would have on the timing. A spokesman said Sept. 2 there was no change in the situation at Sabine Pass.

Salvage operation

Along the channel that serves the terminal, Sabine Pilots advised that attempts were being made to resume inbound traffic with deep draft vessels early Sept. 2, but halted shortly thereafter due to concerns over passing a salvage operation involving a sunk dry dock.

As of midway through the afternoon of Sept 2 CT, one unladen tanker, LNG Juno, was anchored offshore from the Texas-Louisiana border. Further out in the Gulf of Mexico, a second unladen tanker, BW GDF Suez Brussels, was positioned with a captain's destination set for Cameron LNG, according to Platts trade flow software cFlow. Destinations can change regularly, depending on market conditions and other factors.

With observable gas flows to Cameron LNG and Sabine Pass remaining at zero Sept. 2, deliveries to the other four major US liquefaction facilities ticked up to 3.14 Bcf/d from 3 Bcf/d Sept 1, Platts Analytics data showed. The increase was largely due to a rise in feedgas deliveries to Cheniere's Corpus Christi Liquefaction in Texas. Out of the hurricane's path, the terminal continued producing through the storm's landfall. Freeport LNG, south of Houston, also has seen a surge in feedgas deliveries.