Extended transmission rebuild after hurricane complicates Cameron LNG restart

New York — Transmission lines in southwest Louisiana that were severely damaged by Hurricane Laura, cutting power to Sempra Energy's Cameron LNG, will take an extended period to be repaired, utility Entergy said Sept. 11.

The update raises uncertainty about when the export facility will be able to resume production.

Gas deliveries to the terminal have been at zero since the day before the Category 4 storm came ashore on the US Gulf Coast Aug. 27.

Cameron LNG relies on power purchased from Entergy, and widespread outages in the area have continued. Some 69,000 Entergy customers, including the Cameron facility in Hackberry, south of Lake Charles, remained without power Sept. 11. Cheniere Energy's Sabine Pass terminal, in a different part of Cameron Parish, produces its power on-site, helping it get back up and running more quickly. It resumed production Sept. 9.

"Crews have identified damage to approximately 1,600 transmission structures, 6,600 poles, 430 miles of distribution wire, and nearly 2,900 transformers," Entergy said. "For customers in Calcasieu and Cameron parishes, this means an extended restoration effort as the transmission and distribution systems will require nearly a complete rebuild."

The first of nine damaged high-voltage lines into the Lake Charles area was just repaired Sept. 9. Even when all the infrastructure is repaired or rebuilt, Entergy is prioritizing the restoration of power to emergency services first, and then focusing on the greatest number of customers, the company said in a statement. Due to added measures crews must take to prevent the spread of the coronavirus, restoration may take longer, Entergy said.

Prior to its latest statement, Entergy, which has described the damage to area power infrastructure as "catastrophic," said it expected it may be late September before power is available to most customers in southwestern Louisiana that can safely receive it. It did not include a timing estimate in its update.

Sempra has acknowledged that the storm's impact on the surrounding community and the local resources Cameron LNG depends upon has been significant. The operator said in a statement Sept. 4 it was working with Entergy and Lake Charles Pilots on restoration timelines and was helping the community as it begins "the long path to recovery."

The operator has not said whether its electricity connections on site were damaged which, if so, could possibly extend its outage even when the utility's transmission system is working normally again. Sempra also has not addressed the impact of the outage on commercial agreements between the facility, its joint venture partners, and customers. Spokeswoman Anya McInnis, in a Sept. 11 statement, said only that the operator believed the utility was making good progress restoring power to the area.

"We continue to work closely with them to coordinate partial power restoration to our site as quickly and safely as possible to support testing and the initiation of startup activities," McInnis said.

Together, Sabine Pass and Cameron LNG have the capacity to produce over 40 million mt/year of LNG from eight liquefaction trains. Feedgas flows to Sabine Pass stood at 2.8 Bcf/d Sept. 11, down about 100 MMcf/d from Sept. 10, S&P Global Platts Analytics data showed.

Market impact

Prices in Asian import markets have been trending upward, and overall global LNG economics have improved from earlier lows seen when the pandemic first took hold on a global scale in March. September cancellations of cargoes scheduled to be loaded in the US were said to be sharply lower than during the height of the summer.

The overall market impact of the loss of US-origin cargoes from Hurricane Laura has been limited, according to Atlantic-based market sources. According to one trader, short covering from affected players had already taken place over the two weeks since the hurricane hit, with a second trader downplaying the overall impact on the balance of the market.

"Maybe one or two cargoes [need to be replaced], not a lot," said the second trader. "Demand isn't huge as well, so it's not having that massive of an effect."