Freeport LNG Development LP said Monday it would restart one liquefaction train this week after the plant was damaged during former Hurricane Beryl. Despite the plant's ongoing outage, global natural gas prices remained stable.
Freeport was shut down July 7 ahead of the storm and has remained offline since then.
“We are completing initial repairs on the damage sustained to our fin fan air coolers in the hurricane and anticipate restarting the first train this week,” said spokesperson Heather Browne. “We plan to restart the remaining two trains shortly thereafter.”
She added that liquefied natural gas production levels at the 2.1 Bcf/d liquefaction terminal would be reduced “for a period of time” as the plant is operated during repairs. “Production will steadily ramp up to full rates as these repairs are completed,” Browne said.
Five LNG tankers were still floating offshore near Freeport on Monday, according to Kpler vessel-tracking data. The plant’s feed gas nominations stood at about 100 MMcf Monday, according to NGI data, or about 4% of the pipeline capacity feeding the facility.
Beryl made landfall in Matagorda, about 50 miles from the facility as a Category 1 hurricane, but was downgraded and had no impact on other Gulf Coast export terminals.
CenterPoint Energy Inc. said Sunday it had restored power to more than 85% of the two million customers that lost service in Southeast Texas during the storm. Power on Quintana Island in Brazoria County, where Freeport is located, had been restored. Less than 5% of customers in the county were said to be without power. Freeport relies on the power grid for electricity.
Both European and Asian natural gas prices have traded sideways over the last week. The Title Transfer Facility and Japan-Korea Marker continued to hover near $10 and $12 respectively as the week got underway.
Global gas supplies and storage inventories remained strong. Freeport terminal had also been offline most of the year following periodic outages and maintenance work.
Stable fundamentals have the market fixed on summer weather and the possibility for further supply disruptions. Analysts at Engie EnergyScan said in a note to clients on Monday that despite the downtrend in prices that has characterized much of the year, the “market maintains a cautious position.”
Hotter weather was forecast for much of Europe this week, with cooler temperatures expected in the UK and parts of Western Europe. Parts of Asia, including South Korea and Japan, were also expected to be hotter over the next week, according to Maxar’s Weather Desk.
“Summer weather in the northern hemisphere is the top factor to watch out for in the coming weeks,” said Rystad Energy analyst Wei Xiong. “If prolonged heat waves happen in major countries, it may break the well-balanced market.”
South and Southeast Asia have baked under searing temperatures this summer, which has helped support spot buying activity.
India, Japan, South Korea and Thailand have closed or issued tenders for 11 cargoes over the past week, according to Kpler. The tenders cover 11 spot cargoes mainly for delivery in August and September.
The 15.6 million metric tons/year (mmty) Gorgon LNG export facility in Australia, which serves Asian customers, also posted a notice last week that it would shut down at least one-half of a train until Aug. 19 for maintenance work.
However, moderate economic growth in China was also impacting global gas prices as the week got underway. The world’s second-largest economy and a major LNG buyer saw 4.7% economic growth in the second quarter, its slowest stretch since 1Q2023.
Meanwhile, in the United States, Henry Hub futures moved lower on Monday, following a stretch of largely flat trading last week. Milder weather forecasts and strong domestic gas production above 100 Bcf/d were pushing futures prices lower.
The ongoing Freeport outage was cutting into demand as well. Overall, feed gas flows to U.S. LNG export terminals were near 11 Bcf Monday, according to Wood Mackenzie data, largely unchanged from the previous week.
Briefly higher gas prices “may follow signs of Freeport LNG's closely watched return,” EBW Analytics Group LLC analyst Eli Rubin said Monday. However, fading heat across the country next week, strong production and bearish technicals suggested “a deeper test of support for the August contract over the next seven to 10 days.”
Elsewhere, Shell plc said last week that first gas has been achieved at the Jerun field offshore Malaysia. The field will supply customers in Bintulu, including Malaysia LNG, which operates the 30 mmty Bintulu export complex.
Kuwait Oil Co. also said Sunday it discovered “huge commercial amounts” of oil and associated natural gas. The country is aiming to boost oil production from 2.48 million b/d to 4 million b/d by 2035.
The company said the Al-Nukhida field has estimated reserves of roughly 2.1 billion bbl of light oil and 5.1 Tcf of gas.
