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Extended shutdown of LNG unit at Kinder Morgan's Elba export facility continues

Highlights

Timing of Unit 2 repairs following May fire uncertain

Investigation said to be nearing completion: operator

Houston — Six months after a fire at Kinder Morgan's 10-train Elba Liquefaction facility in Georgia, one of the units remains offline and the operator is unable to say when the unit will resume production.

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The ongoing outage comes during a particularly bullish period of activity for US LNG exporters, following a cratering of global demand earlier in the year due to the pandemic.

At Elba, the smallest of the six major US liquefaction facilities, a repair plan for Unit 2 will be finalized after the investigation into the fire is complete. That investigation is nearing completion, spokeswoman Katherine Hill said in an email responding to questions Nov. 19.

The operator provided similar statements in July and August, saying at each of those junctures that the investigation would be completed in the near term. A spokesman for Shell, the sole offtaker from the facility, did not immediately respond to a message seeking comment.

The terminal near Savannah -- originally built to import LNG and later converted to handle exports after the US shale revolution -- utilizes Shell's Movable Modular Liquefaction System design. With 10 trains operating, it has a capacity of 2.5 million mt/year.

To date, because of the fire and ongoing shutdown of Unit 2, all 10 trains have not yet produced LNG simultaneously. Kinder Morgan placed the last of its 10 production units into service Aug. 27. Elba shipped its first cargo in December 2019. Only five more cargoes have loaded in the 11 months since then, according to cFlow, S&P Global Platts vessel-tracking software.

Normally, it could take as long as 100 days for each of the trains at Elba to fill a standard LNG cargo, Platts Analytics data show. By comparison, a single train at Cheniere Energy's Sabine Pass in Louisiana could fill a standard LNG cargo in just under six days.

The fire at Elba in mid-May occurred in a mixed refrigerant compressor of Unit 2. Two adjacent units that were shut down as a precaution were later brought back online.

Besides the lengthy shutdown of Unit 2 at Elba, Cheniere continues to deal with the inability to use two of its five storage tanks at Sabine Pass that have been offline for almost three years.

Asia demand

While the company has effectively managed operations at the terminal with its other three storage tanks during the outage, being able to use the additional capacity would give it more flexibility, especially during times when consumption is high or access to feedgas may be limited because of pipeline maintenance.

An inadvertent release of gas January 22, 2018, led to the shutdown of tanks 1 and 2 at Sabine Pass in Cameron Parish. Cheniere said in August 2019 that repairs were complete. It has been awaiting regulatory approval since then to bring the tanks back online. A spokeswoman said Nov. 19 that there were no new updates to provide.

Total feedgas deliveries to major US LNG export facilities remained near a record high above 10.2 Bcf/d on Nov. 19, Platts Analytics data show. While the Platts JKM, the benchmark for spot LNG prices in northeast Asia, was assessed 7.8 cents/MMBtu lower on the day at $6.401/MMBtu on Nov. 19, a colder weather outlook for Japan and South Korea in December could bolster spot LNG price sentiment in the world's biggest LNG import market going forward.