Freeport LNG Development LP’s two-week delay to finish repairs to a third train at its export terminal on the Texas coast is set to extend lower gas flows to two months, pushing the restart to mid-March.
Feed gas flows to the liquefied natural gas export facility began to drop on Jan. 14 as a winter storm swept across the country, according to NGI’s U.S. LNG Export Tracker.
The storm damaged an electrical motor. A spokesperson told NGI that it was extending the work by two weeks. This update came exactly a month after the terminal said it expected the unit to be down for at least one month.
Prior to the outage, gas flows were topping out around 2 Bcf/d. Flows since have averaged 0.65 Bcf/d below that level through February. If the outage were to extend into mid-March, that would imply an impact of about 40 Bcf of lost feed gas demand, according to an NGI analysis.
"That total lost flow is not something to snuff at when average daily exports from all U.S. export LNG terminals since Jan. 14 hovers at 13.07 Bcf/d,” NGI analyst Josiah Clinedinst said. “If Freeport Train 3 were on, we would be around 13.71 Bcf/d for average daily exports."
The reduced demand comes as Lower 48 gas inventories have swelled to nearly 500 Bcf above the five-year average amid one of the mildest winters in years and gas production near record levels.
New York Mercantile Exchange prompt-month futures had shed as much as $1.00 this year, down as low as $1.576/MMBtu in mid-February, before rebounding to $1.860 as of Thursday. Meanwhile, NGI’s Henry Hub cash price remained weaker at an average $1.660 on Thursday, down 90 cents since the start of the year.
The restart of the third train “might help stem the slide” in prices, “but if you continue to get weather like this through March and early April, the weather is going to continue to be a bearish influence,” Snapper Creek Energy analyst Kyle Cooper told NGI.
The two-week delay could be overshadowed by milder weather forecasts in the near term, EBW Analytics Group analyst Eli Rubin said. Lost physical demand during a mild stretch of weather in the first week of March “may be a greater factor in throttling any nascent bullish momentum” for the front end of the forward curve, Rubin said.
U.S. LNG feed gas volumes have recently hovered around 14 Bcf/d from about 14.5 Bcf/d before the outage. “We don’t have high hopes of an LNG surge in the near term,” Criterion Research Vice President of Research James Bevan said on Enelyst on Thursday.
Freeport’s third train issues this winter follow an explosion and fire in mid-2022 that knocked the terminal offline for eight months.
In late 2023, Freeport also recorded significant dips in its feed gas flows, which corresponded with reports of operational issues, according to an NGI analysis of pipeline and regulatory data. The terminal experienced an electrical issue in November that caused a brief outage and flaring.
“It's got to be a big disappointment in terms of its inability to maintain consistent flows,” Cooper said. “Its history just reveals that the facility and the surrounding infrastructure is extremely fragile.”
