Freeport LNG was heard to have canceled more than seven cargoes after Hurricane Beryl damaged part of the Texas facility and kept the plant offline for over a week as per market news, sources S&P Global.
Increased Demand
Some Freeport off-takers were heard trying to buy some cargoes to replace lost volumes, resulting in increased demand for prompt cargoes, sources said. Multiple sources said Freeport was heard to have canceled 8 to 10 cargoes.
The Platts Gulf Coast Marker for US FOB cargo loading 30-60 days forward was assessed at $9.41/MMBtu on July 18, up 14 cents/MMBtu on the day.
Freeport shut down all three trains on July 7, a day before Beryl arrived on the Texas Gulf Coast. The operator said on July 15 that it expected to resume production on the first of three liquefaction units this week and the remaining two trains “shortly thereafter.”
Feedgas deliveries to the facility south of Houston have steadily risen in recent days, with close to 500 MMcf/d delivered July 18, according to S&P Global Commodity Insights data, based on nominations for the morning cycle that could later be revised. The scheduled flows are around 20% of the peak observed deliveries to the terminal.
Freeport declined to comment on July 18 about commercial activity, including any cargo cancellations.
Of the canceled cargoes, one was set to be delivered to the Mejillones terminal in Chile in early August, two sources said.
The canceled cargo was going to be supplied by TotalEnergies, the sources added.
TotalEnergies has a long-term agreement with E-CL, a subsidiary of French energy company Engie, to supply LNG to the Mejillones terminal from its global portfolio, based on Commodity Insights data.
TotalEnergies and Engie did not immediately respond to separate requests for comment on the reported cancellation.
Phased Restart
Freeport on July 15 announced plans for a “phased restart” of liquefaction operations.
Five LNG carriers are currently anchored outside of Freeport, with all but one reporting the terminal as their destination, S&P Global Commodities at Sea data show. The Celsius Giza is listed as for orders but has been anchored near Freeport since late July 16.
A dredge has been working around Freeport in recent days, limiting vessel access to the terminal, which has volumes in storage, sources said. An Atlantic-based source said the dredging work was expected to be completed soon without causing further cargo cancellations.
Another carrier, the Wilforce, was anchored near Freeport until earlier this week when it sailed to Galveston where it has been anchored since.
Hurricane Beryl made landfall as a Category 1 storm early July 8 near Matagorda, Texas, which is south of the facility, with maximum sustained winds of 80 mph before weakening as the storm progressed inland.
Beryl caused widespread power outages in the region. Freeport’s power supplier CenterPoint Energy reported restoring power over the weekend to the area including the LNG terminal on Quintana Island in hard-hit Brazoria County, south of Houston.
Freeport said July 15 that it was “completing initial repairs on the damage sustained to our fin fan air coolers in the hurricane and anticipate restarting the first train this week.” The air coolers are used to dissipate heat at liquefaction plants, and the restart preparations required power.
“Production levels after restart will be at reduced rates for a period of time as we continue repairs while operating the facility,” Freeport spokesperson Heather Browne said at the time. “Production will steadily ramp up to full rates as these repairs are completed.”
US utilization
Total US LNG feedgas deliveries have fallen in recent days despite the flows to Freeport, reaching about 10.8 Bcf/d on July 18, having hovered around similar levels since July 16, Commodity Insights data showed.
The decline in overall deliveries was in part due to lower utilization at Cheniere’s Corpus Christi LNG export plant in Texas. Operations at that facility continued uninterrupted through Hurricane Beryl, according to Cheniere, which declined to comment about the more recent decline in feedgas demand at the plant.
Instead, the reduced utilization at Corpus Christi coincides with planned maintenance work on the facility’s Sinton Compressor Station, which began July 16 and was expected to last until July 22, according to a notice to customers posted on the electronic bulletin board for the facility.
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Source: S&P Global
