HOUSTON, June 8 (Reuters) – Freeport LNG, operator of one of the largest exporting plants in the United States producing liquefied natural gas (LNG), will close at least three weeks after an explosion at its facility on the Texas Gulf Coast.
The fire affected U.S. natural gas markets on Wednesday and is likely to spread to European and Asian markets, analysts said.
Freeport LNG, which supplies about 20 percent of U.S. LNG processing, revealed the shutdown Wednesday afternoon after assessing the damage to the massive facility.
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Its closure removes a major supplier from markets that are already strained by European buyers shunning Russian LNG over its invasion of Ukraine – actions Moscow calls a “special operation” – and rising demand in China, they said. analysts.
“This is a major production disruption at a major U.S. facility,” said Alex Munton, director of global gas and LNG at research firm Rapidan Energy. Freeport LNG ships about four loads a week and a three-week shutdown will take at least 1 million tons of LNG out of the market, he said.
“It’s going to mean one thing: scarcity. Competition for one-off LNG will increase global LNG prices,” Munton said.
The plant can process up to 2.1 billion cubic feet of natural gas per day (bcfd) and at full capacity can export 15 million tons per year (MTPA) of liquid gas. U.S. LNG exports hit a record 9.7 bcfd last year, according to the U.S. Energy Information Administration (EIA).
In March, 21 payloads were loaded at the Freeport facility, carrying about 64 billion cubic feet of gas to destinations in Europe, South Korea and China, according to the U.S. Department of Energy. That’s more than the 15 charges in February and 19 in January.
U.S. natural gas futures plummeted following news of the explosion over concerns that it could disrupt the plant’s gas demand. They closed at around 6% at $ 8.699 per million British thermal units (mmBtu), after reaching a nearly 14-year high of 9.664 mmBtu earlier in the day.
Freeport LNG was founded in 2002 by billionaire Michael Smith and processes gas for companies such as BP (BP.L), JERA, Kansai Electric (9503.T), Osaka Gas (9532.T), SK E&S and TotalEnergies. It is in the midst of expanding the plant’s capacity to 20 MTPA.
It is being investigated what caused the explosion, a company spokesman said, without giving further details about the cause of the fire.
A U.S. Coast Guard spokesman said Wednesday that a two-mile safety zone had been established east and west of the Freeport LNG facility, closing this portion of the intracostal waterway to traffic. of ships.
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Report by Liz Hampton in Denver, Sabrina Valle in Houston and Scott DiSavino in New York; Editing by Marguerita Choy, Richard Pullin, Chris Reese and Kenneth Maxwell
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