NatGas Flows Start To Freeport LNG's Long-Shut Export Plant

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by Tyler Durden
Tuesday, Jan 17, 2023 - 06:25 PM

The restart of Freeport LNG, a US liquefied natural gas export terminal on the Texas Gulf Coast, could be nearing as new data via Reuters showed pipelines flowing to the facility started receiving natural gas over the holiday weekend. 

On Jan. 14, NatGas began flowing to Freeport and could reach as much as 69 million cubic feet per day (mmcfd) on Tuesday, Reuters data showed. 

A source told Reuters that Freeport received NatGas flows in December to maintain a flare system. We noted activity at the plant last week might indicate restart was nearing

Freeport LNG officials are still sticking with their target for resuming production in the second half of the month. The export facility was shuttered after an explosion on June 8, 2022.  

Despite the growing anticipation of resuming production soon, Freeport LNG would still face regulatory hurdles to restart the plant. 

Three LNG market participants told S&P Global that Freeport had a higher probability of restarting in February or March -- none of that would come as a surprise considering the constant delays. 

The Quintana, Texas, facility accounts for 15% or so of all US LNG exports. A restart of the facility would be a bullish catalyst for US NatGas prices which have been stuck in a bearish downward spiral since last August -- touching an 18-month low last week. 

US NatGas prices are up 8.5% on the session, primarily because of longer-term models suggesting the possibility of colder weather

However, Houston-based energy firm Criterion Research had this to say about the Freeport developments: 

We noted that Freeport LNG began to receive marginal gas over the weekend, with 15-35 Mmcf/d being delivered via Gulf South's Coastal Bend Header Pipeline. This is not the first time we've seen flows of that magnitude, with Freeport flowing similar volumes for two other periods since going offline in June 2022. Freeport representatives have continued to affirm the second half of the January restart timeline, officially laid out in December 2022. However, several outlets, including ours, have doubts about that possibility. Based on the latest imagery of the facility -- Freeport is still missing several key pieces of equipment needed for a restart that could delay initial liquefaction operations into February or March 2023.

When will Freeport be fully back in-service? That's a difficult question, but when it does come online, it would be a bullish catalyst for NatGas.