With Freeport LNG operating at a fraction of its full capacity, natural gas futures have fallen following a short rally the week before. (Source: Shutterstock.com)
Since April 10, Freeport LNG has been operating at a fraction of its capacity, hitting natural gas prices in an already weak market.
Reuters reported April 15 that the natural gas liquefaction facility was operating at 5% of capacity at 125 MMcf/d. Freeport LNG takes in about 2.2 Bcf/d of natural gas when at normal operational levels.
The company has been quiet on the most recent shutdown. A spokeswoman told Hart Energy on April 16 that it has no new information since its last update in March.
The drop in gas uptake follows a series of issues with all three of the company’s on-site trains going as far back as April 2023.
This year, a January cold snap damaged the electrical engines in Train 3, causing a shutdown for repairs. The incident caused Freeport LNG to schedule follow-up repairs on its other two trains to avoid a repeat of the incident. Company officials announced that the Train 2 liquefaction unit had been shut down on March 20, and expected Train 1 to be shut down shortly after.
Each Freeport train can turn about 700 MMcf/d of gas into LNG.
The company had planned to use the repair time to speed up a debottlenecking project. Bloomberg reported Freeport LNG was working on a debottlenecking project that would add additional compressor capacity for all three of the trains on site.
The debottlenecking work was scheduled for completion in June and designed to increase the plant’s production capacity from 15 million tonnes per year (mtpy) to 16.5 mtpy.
The Train 3 liquefaction unit experienced a trip on April 10, according to a report Freeport LNG filed with Texas regulators. Prior to the most recent shut down, Freeport LNG had said that it expected to return to full capacity in May.
The shutdown comes at a time when natural gas producers are already dealing with an oversupply that has kept the price of Henry Hub futures below $2 per MMBtu since early February. After briefly reaching $1.93/MMBtu on April 10, the price slipped below $1.66/MMBtu on April 16.
Natural gas demand from U.S. LNG liquification facilities is around 12.6 Bcf/d, according to equity research firm TPH&CO. Venture Global’s Calcasieu Pass also fell to about 1 Bcf/d of feed gas demand during the week.
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