Freeport says first LNG production achieved since June fire, ramp-up in progress

Freeport LNG has achieved first production since a June 2022 outage and expects to ramp up to about 2 Bcf/d "over the next several weeks," the operator said Feb. 21 after receiving regulatory approval for resuming partial service at the Texas export plant.

Freeport LNG said in a statement that the first LNG production and ship loading from the facility began on Feb. 11, which was a day before the facility resumed exports with a partial cargo. Freeport has shipped four partial cargoes since Feb. 12, using LNG that was in storage before the three-train, 15 million mt/year capacity terminal was forced to shut down following an explosion and fire at the facility on June 8, 2022.

It was not immediately clear how much LNG has actually been produced so far, with much likely being used to commission equipment.

Freeport provided the production update shortly after the US Federal Energy Regulatory Commission authorized the return to service of two liquefaction units at the terminal south of Houston.

"Today's authorization provides for the immediate full return to service of one liquefaction train, that has already restarted, and the incremental restart and full return to service of a second train," Freeport said. "The restart and return to service of Freeport LNG's third liquefaction train will require subsequent regulatory approval once certain operational conditions are met."

The Feb. 21 approval from FERC covered Freeport's Train 3, which is the train that the operator said has already restarted and ready to ramp up to full production rates. The authorization also covered Train 2, which Freeport had said is ready for restart activities. But the approval from FERC did not go as far as Freeport had requested when it asked for "authorization to progress to the full, commercial operations" of all three trains on Feb. 13. The request had said it expected Train 1 to follow Train 2 within a few weeks.

The Freeport terminal has shown a meaningful increase in feedgas deliveries over the past week. The terminal was scheduled to receive nearly 471 MMcf/d of feedgas Feb. 21, based on nominations for the morning cycle that could later be revised, S&P Global Commodity Insights data showed. Flows to Freeport have been at similar levels since Feb. 13, which marked the highest volumes of daily feedgas deliveries to Freeport since the outage began.

Even though Freeport had resumed exporting partial LNG cargoes, significant uncertainty remained about the timeline for restarting normal LNG production before the Feb. 21 update from the company.

The ramp-up at Freeport was to come at a time of depressed prices for delivered LNG to Northwest Europe and Asia. Freeport's startup was expected to add to the bearish sentiment in the near term, amid mild weather in Europe and healthy gas inventories.

Platts DES Northwest Europe for April was assessed at $13.292/MMBtu Feb. 21, up 29.8 cents/MMBtu on the day. The Dutch TTF April contract was assessed at $15.292/MMBtu at 4:30 p.m. London time, down 11.4 cents/MMBtu on the day.

Freeport's long-term offtakers include BP, South Korea's SK Group, Japanese utilities JERA and Osaka Gas, and France's TotalEnergies.

"Returning to liquefaction operations is a significant achievement for Freeport LNG," Freeport CEO and founder Michael Smith said in the company's statement. "Over the past eight months, we have implemented enhancements to our processes, procedures and training to ensure safe and reliable operations, and significantly increased staffing levels with extensive LNG and petrochemical operating experience to reduce overtime, enhance operational excellence, and improve quality assurance and business performance."