Freeport LNG's wait gets longer

Dec. 24—Knocked out of action by a June 8 fire, the big Freeport LNG Development's export terminal on the Texas Gulf Coast worked all summer and fall to fix the damages, but it has been stymied by a 64-point list of demands from the Federal Energy Regulatory Commission.

The situation was analyzed by Congressman August Pfluger, Odessa oilman Kirk Edwards, Panhandle Producers & Royalty Owners President Judy Stark, Texas Alliance of Energy Producers President Jason Modglin and Permian Basin Petroleum Association President Ben Shepperd. The FERC didn't respond to a request from the Odessa American for an explanation.

Pfluger said Wednesday from Washington that the company and the FERC should work together for the mutual good of the nation, Europe and the energy industry. "The news that Freeport LNG is on track to receive natural gas is a step in the right direction for Permian Basin producers and our nation's export capabilities," the San Angelo Republican said.

"It is imperative that the FERC and Freeport work in tandem to safely reopen the facility."

The initial opening has been pushed back from mid-November to the end of the year and now to the second half of January with the restoration of full operations not projected till March as the company scrambles to satisfy the FERC. The terminal was constructed between 2005 and '08.

Edwards said it "has been ready for quite a while to help Europe out of their energy crisis, but the Biden administration has it tied up.

"People are freezing to death in Ukraine and other parts of Europe because they don't have enough liquefied natural gas to warm themselves in their homes and for this to be tied up in bureaucratic red tape is a tragedy."

Edwards said the terminal has put billions of cubic feet of natural gas into storage while it awaits the excruciatingly slow federal go-ahead.

"Normally that gas would be sent away on LNG tankers to alleviate Europe's suffering," he said, noting that natural gas is selling for 10 times in Europe what it brings in the United States or about $60 per thousand cubic feet.

Stark said from Amarillo that the fire was very destructive and repair crews at the terminal have had a lot of work to do. "You leave nothing to chance when it comes to men and machinery, especially in the oil and gas industry, which is one of the most highly regulated industries in the United States," she said.

"The deficiencies listed, in my opinion, were not out of the ordinary. Some were valve testing procedures, failure to adjust alarms that could warn operators of rising temperatures during operations and procedures that allowed operators the discretion to close valves that might cause LNG to be isolated in pipes.

"There was a control room that did not adequately show when temperatures soared. Alarms were 'constantly indicating' on equipment, leading to what some operators described as 'alarm fatigue,'" Stark said. "Severely damaged electrical wiring likely ignited the released gas from a pipeline breach and led to the fireball."

There were no fatalities from the accident.

Modglin said from Austin that American LNG export terminals "are playing a key role in meeting the world's energy demands this winter and they are a critical part of our energy security infrastructure, helping to expand the opportunity for independent producers to compete directly with OPEC-Plus," which includes Russia.

"These LNG terminals have attracted new investments to Texas all along the natural gas supply chain and they are working to lower exorbitant energy prices," Modglin said. "We believe the FERC should work expediently with operators to restore and maximize American export capability rather than layering more bureaucratic red tape that is contrary to President Biden's commitment to increase LNG shipments to Europe.

"Added delays will further empower overseas competitors and undermine efforts to stop Russia from profiting from the Ukraine invasion."

Shepperd said there "is no question of the vital role that the Freeport LNG terminal plays in both processing domestically produced energy and transporting it to American allies abroad.

"The United States should continue to be a leader in supporting the energy needs of friendly nations and any effort, whether by regulatory agencies here or unfriendly foreign actors, to diminish this role is dangerous to our sustained economic and energy security," Shepperd said.

"We encourage FERC to ensure the safe restart of this facility because it is of the highest priority and their delays can cost lives."

Owned by Michael S. Smith, who spent $15 billion building it on Quintana Island off the Texas Gulf Coast, Freeport LNG Development says on its website that it will produce 15 million tons of LNG per year when it becomes fully operational again.

"However, the project's benefits and far-reaching economic impacts are equally impressive," the company says. "Approximately 30,000 permanent jobs will be created across the U.S. to support the exploration and production of feed gas supplied to our facility.

"The complete economic benefits of exporting our contracted LNG will be between $5.5 billion and $8 billion annually."

Having each cost from $10 billion to $20 billion to build and with each one having taken 2 1/2 to four years to complete, only six other LNG export terminals are in operation at Corpus Christi, Kenai, Alaska, Hackberry and Sabine, La., Cove Point, Md., and Elba Island, Ga., owned respectively by Cheniere Energy, Trans-Foreland Pipeline Co., Sempra-Cameron LNG, Cheniere, Berkshire Hathaway-Dominion Energy-Brookfield Asset Management and Kinder Morgan-Global Energy Partners, according to the FERC.

Supplied by pipelines, the terminals freeze the natural gas to 260 degrees below zero to liquefy it and then load it onto ships that were averaging 100 in number each month before the Freeport fire.

Weighing 45 percent as much as water, LNG is odorless, colorless, non-toxic and non-corrosive.

When it reaches its destinations, it's thawed out or "regassified," having had the dust, acid gases, helium, water and heavy hydrocarbons removed to make a mixture of mostly methane and a little ethane.