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Texas tanker bottleneck grows on slow Freeport LNG restart after Beryl

Published 19/07/2024, 03:26 am
© Reuters. FILE PHOTO: Model of LNG tanker is seen in front of the U.S. flag in this illustration taken May 19, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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By Marianna Parraga and Curtis Williams

HOUSTON (Reuters) -The number of liquefied natural gas (LNG) tankers waiting to load at Freeport LNG in Texas has increased since the U.S. second largest exporter of the supercooled gas halted processing ahead of Hurricane Beryl's landfall last week, according to shipping data on Thursday.

Beryl made landfall on July 8 near Matagorda, on the Texas coast, lashing the state with 80-mph (130-kph) winds that caused infrastructure damages and left more than 2 million customers without electricity for days.

Ports and energy companies in many coastal cities, including Freeport, suffered wind damage and slow restoration of power.

Freeport LNG, which shut its three liquefaction trains on July 7 and reported wind damage after, has had a slow operational restart since.

The LNG exporter said on Monday it planned to restart one processing train this week and the remaining two trains shortly after, but production would be reduced while it continued repairs.

U.S. gas futures had dropped about 7% on Monday to a 10-week low after it became clear to the market that Freeport LNG would likely continue to operate at less than full capacity for several more days.

On Thursday, feedgas to the facility was rising with it expected to use 500 million cubic feet, up from 400 mmcf on Wednesday, according to LSEG data. The gas utilization increase is seen as an indicator of LNG production starting in the first train, which can use up to 700 mmcf per day.

However, vessel loading has not resumed. A total of six empty LNG tankers were anchored near the port, compared with a couple ships before the storm, with some of them accumulating more than 10 days of wait. Last loaded vessels before Beryl's landfall departed Freeport on July 5, according to LSEG.

As of Thursday, Freeport LNG had not distributed any instruction to bring tankers into its berths, even though there were some vessels in schedule, a source familiar with the company's operations said.

The Port of Freeport last week reopened the navigation channel, but draft restrictions for vessels remain, the Brazos Pilots Association said.

Long waits for vessels that have back-to-back contracts tend to lead to cargo cancellations.

Freeport LNG has canceled at least 10 cargoes for loading through August, Bloomberg reported, citing traders familiar with the matter.

© Reuters. FILE PHOTO: Model of LNG tanker is seen in front of the U.S. flag in this illustration taken May 19, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Freeport LNG said on Thursday it would not comment on its commercial activity, including cargoes.

Gas flows to the seven big U.S. LNG export plants has fallen to 11.6 billion cubic feet per day (bcfd) so far in July due mostly to the Freeport outage, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.

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