Natural gas traders and buyers around the world are watching to see when a crucial US exporter of the fuel will fully recover from a June explosion.
(Bloomberg) — Natural gas traders and buyers around the world are watching to see when a crucial US exporter of the fuel will fully recover from a June explosion.
Freeport LNG on the Texas coast exported a partial cargo of gas on Sunday aboard BP Plc’s Kmarin Diamond vessel, the first shipment since the blast shut down the plant. Although more ships are lined up to take on cargoes, the fuel is being withdrawn from storage tanks because Freeport’s production lines are still idle.
Some sections of the huge complex are still undergoing repairs and awaiting equipment deliveries, according to regulators. On Monday, Freeport asked for government authorization to restart key units such as gas-liquefaction modules. As recently as Feb. 11, federal officials said there’s no firm timeline for the resumption of full operations.
The stakes are high. When a 450-foot (140-meter) fireball erupted from the Freeport plant and halted operations, European buyers trying to stock up on fuel for winter had to scramble for alternative supplies. At the same time, shutting a major export facility forced gas to back up into the domestic market and prices sank.
- Read more: Texas LNG Plant Exports First Cargo Since Crippling June Blast
For residents of the small coastal community 65 miles south of Houston, the concerns are more visceral. Some worry that Freeport’s owners haven’t learned the lesson of last year’s blast. If the disaster had unfolded in another part of the complex such as storage tanks holding vast quantities of gas under pressure, it could have had fatal consequences.
“If just one of them containment units go, we got Chernobyl over here in Freeport,” said Manning Rollerson, a 61-year-old resident with vivid memories of last summer’s blast. “I felt my house shift.”
Federal regulators faulted Freeport’s owners for failing to heed a warning from an employee about a misplaced pipe two days before he explosion.
“There were a lot of things Freeport LNG weren’t doing that similar facilities do do,” Bryan Lethcoe, a director in the US Transportation Department’s office of pipeline safety, told residents during a Feb. 11 briefing. “So I do think it’s a fair statement to say that up to now, they’ve had some systemic issues.”
Extensive interviews with employees and contractors working at Freeport LNG indicate the company has kept a tight lid on information about timelines and the progress of repairs. None who spoke actually had any inkling of when operations are expected to fully resume.
- Read more: Systemic Failures Led To Explosion That Shut Texas Gas Plant
A Freeport spokesperson declined to comment for this story. The company is hopeful it can restart before the end of March, according to a person familiar with the company’s thinking, who asked not to be identified discussing private conversations.
Previously, the company said reconstruction would be completed by the end of November, in time for a mid-December resumption of production. Late last week, regulators granted Freeport permission to resume some shipping operations, paving the way for Sunday’s resumption of exports.
Freeport’s customers also are in the dark, having received little communication from the company in recent months aside from periodic notices that shipments have been canceled, according to people with knowledge of the matter who asked not to be identified discussing private conversations.
Out of frustration, one gas buyer used satellite imagery to determine the progress of Freeport’s repairs, said one person with knowledge of the situation who asked not to be identified discussing private matters.
Before the explosion, Freeport LNG accounted for almost 20% of overseas shipments of US gas. The plant’s importance grew in early 2022 after Russia’s invasion of Ukraine threw European gas markets into disarray at a time when supples of the power-plant and furnace fuel already were tight.
One evening in early February, contractors hired to help with repairs gathered over beers at Pier 30 Bar and Grill, which serves up crawfish and oysters within sight of the LNG plant.
They said they are clocking full, 40-hour work weeks but that daily duties have slowed and they have not been told anything about when the site would restart. The contractors asked for anonymity because they were not authorized to discuss their work.
In late January, a digital sign was installed alongside Highway 332 that leads to the plant entrance cautioning motorists with a message: “Plant start up, expect flaring.”
Soon thereafter, residents began seeing orange lights in the pre-dawn sky, a telltale sign of increasing activity. Gas exporters, oil refiners and chemical makers use flaring — the practice of burning off excess gases — to maintain the delicate balance of pressure, heat and volatile substances circulating through their pipes and processing units.
No Freeport executives attended the Feb. 11 briefing by regulators at the local high school. Resident Gwendolyn Jones and other locals have a problem with that.
“We want Michael Smith, the CEO, to put your big boy pants on” and meet with residents, said Jones, 64.
–With assistance from Ari Natter, Gerson Freitas Jr., Stephen Stapczynski and Anna Shiryaevskaya.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.