Shutdown of US LNG exporter after fire raises supply concerns

ONE of the US’s largest LNG export facilities has shutdown after a fire, raising supply concerns amid efforts to reduce reliance on Russian gas.

The incident occurred on 8 June at Freeport LNG’s Quintana Island site, on the Texas Gulf Coast, prompting a shutdown that the company says will last at least three weeks. No fatalities or injuries were reported, and the cause of the fire is currently under investigation. The site has liquefaction capacity of 15m t/y, which is equivalent to about 2.2bn ft³/d of gas. Freeport’s buyers include BP, TotalEnergies, Osaka Gas, Jera, and SK, with contracts totalling 13.4m t/y of production capacity.

Tom Marzec-Manser, Head of Gas Analytics at the Independent Commodity Intelligence Services (ICIS), said that in the last three months 68% of all of Freeport’s LNG exports have gone to the EU and UK, adding that a three-week shutdown will mean the loss of almost 1m t of production. But he also said that three weeks seemed “optimistic”.

Press speculates that stored supplies of gas will help prevent shortages, but a prolonged closure could be an issue for supply and markets. The Guardian reports that analyst Edmund Siau said if Europe intends to import LNG at the same level, it needs to pull in replacement cargoes. Siau is Lead Analyst for Gas/LNG at energy consultancy FGE.

The day after the incident at Quintana, European gas prices spiked by up to a fifth. However, Reuters reports that prices cooled off at the close of market.

According to the US Energy Information Administration (EIA), the US became the largest LNG supplier to the EU and UK in 2021. With countries working to reduce their imports from Russia – following its invasion of Ukraine – US supplies have become more important. Last week, natural gas deliveries to US LNG export facilities averaged 12.5bn ft³/d.