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Freeport LNG begins liquefaction production at Texas export facility

Freeport LNG Development LP has become the sixth major U.S. natural gas liquefaction facility to start up, with the operator confirming Aug. 19 that production had begun at the Texas facility.

Freeport LNG registered initial output on Aug. 12, but a gasket rupture the following day resulted in some refrigerant being released, requiring repairs before the startup could be officially acknowledged. On Aug. 19, the terminal reported sustained production, spokesperson Heather Browne said in an emailed statement.

"This is an exciting and significant milestone which now paves the way for our first train 1 cargo loading expected later this month," Browne said. "Freeport's train 1 remains on schedule for a September start of commercial operations."

The facility south of Houston along the Gulf of Mexico experienced several construction- and weather-related delays, most notably following heavy rain in the aftermath of Hurricane Harvey in August 2017. It now joins Cheniere Energy Inc., Dominion Energy Inc., Sempra Energy and Kinder Morgan Inc. in liquefying U.S. shale gas for export. Cheniere operates two facilities. Kinder Morgan's facility has been producing LNG for several weeks but has yet to load its first cargo.

The primary long-term buyers of offtake from Freeport LNG train 1 are Japanese utilities Osaka Gas Co. Ltd. and Chubu Electric Power Co. Inc., which each control 2.2 million tonnes per annum of capacity. In total, long-term contracts cover roughly 13.2 mtpa of the three-train facility's output of 15 mtpa, with additional short-term contracts, including a three-year deal with commodity trader Trafigura, covering the remaining supply.

Freeport LNG operates on a tolling model. Buyers of the LNG are responsible for the procurement and delivery of feedgas supply to the liquefaction facility, as well as arranging shipping and deciding where the cargoes are delivered.

The unladen Mitsui- and Kansai Electric Power-owned tanker LNG Jurojin remained anchored Aug. 19 offshore Freeport LNG in a queue area for vessels bound for Freeport and with a captain's destination set for the port where Freeport LNG is located. The tanker last dropped off a load of LNG at Japan's Ohgishima receiving terminal around July 19 after picking up a cargo at Nigeria's Bonny facility around June 20, S&P Global Platts vessel-tracking data showed.

Freeport LNG reported a commissioning problem last week to the Texas Commission on Environmental Quality when some refrigerant was inadvertently released to the atmosphere. Repairs to a ruptured gasket tied to a mixed-refrigerant system of the first liquefaction have since been completed, Browne said. The mishap followed Freeport LNG's completion of repairs Aug. 9 to a flare vent line that had encountered a gas leak during the startup and cool-down process for train 1.

Harry Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.