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Cheniere seeks to resume service on one storage tank at Sabine Pass in near term

Highlights

'Priority' approach must be approved by regulators

Gas release mishap in 2018 led to outage involving two tanks

Houston — Cheniere Energy wants to prioritize returning to service one of two storage tanks that have been offline for almost two years at its Sabine Pass LNG export terminal in Louisiana as global demand is expected to pick up through the winter.

The company said in a letter to US regulators released Tuesday that the approach would allow it to utilize the first tank in the near term while it continues to work to meet requirements needed to resume service on the second tank.

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

In recent weeks, Sabine Pass and Cheniere's export terminal near Corpus Christi, Texas, have ramped up activity, accounting in one snapshot for more than 70% of all gas deliveries to major US liquefaction facilities November 28. Though netbacks have experienced some weakness, the forward curve suggests higher prices in the future, lending support for the robust flows.

MISHAP BRINGS SHUTDOWN

A mishap that caused an inadvertent release of gas in January 2018 led to the shutdown of the two tanks at Sabine Pass. Cheniere said in August that repairs were complete and that it expected both storage tanks to be operational by the end of this year if there were no further regulatory delays.

The company still must satisfy the US Department of Transportation's Pipeline and Hazardous Materials Safety Administration and the Federal Energy Regulatory Commission, which required corrective actions meant to prevent a recurrence. Among other things, the agencies said previously they were waiting for additional testing and examination, procedure modifications and documentation.

Cheniere is now requesting a deviation from the structure set forth in a joint letter from the agencies to the company issued on July 9. Specifically, it wants the agencies to modify the approval process, allowing for the completion and acceptance of the conditional requirements applicable to tank 1 while continuing work to complete the remaining requirements applicable to other Sabine Pass LNG tanks.

"As discussed with FERC and PHMSA, this approach will allow Sabine Pass to place priority on safely returning Tank S-101 to service, which will allow Sabine Pass to utilize Tank S-101 storage capacity in the near term," the operator said. "While this request will facilitate a prioritized return to service for Tank S-101, Sabine Pass remains fully committed to addressing all Tank Operation Conditional Requirements as relevant to the remaining tanks in a safe and timely manner."

COMPANY CITES PROGRESS

Cheniere's request reflects the progress it has made on the requirements to bring tanks 1 and 3 into service, especially on Tank 1, spokeswoman Jenna Palfrey said in an email responding to questions.

Cheniere operates five liquefaction trains at Sabine Pass and is building a sixth. Two trains are in operation at its export terminal in Texas; a third train is under construction there, and a midscale expansion that would involve smaller units has been proposed.

Four more major LNG export terminals are in operation in the US. Three are actively shipping cargoes, while the fourth -- Kinder Morgan's Elba Liquefaction in Georgia -- has yet to export a cargo.

-- Harry Weber, Harry.Weber@spglobal.com

-- Edited by Bill Montgomery, newsdesk@spglobal.com