Despite Regulatory Progress, Freeport LNG's Full Restart Unlikely Before March

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Washington DC, FERC, Federal, Energy, Regulatory, Commission

Freeport LNG on Thursday cleared another hurdle in its plans to restart operations at the Texas Gulf Coast terminal. But the resumption of exports from the facility may still be a way off.

The Federal Energy Regulatory Commission (FERC) wrote a letter to Freeport granting its Jan. 22 request to begin a cooldown of its Loop 1 transfer piping and reinstate the facility’s boil off gas (BOG) management compressors and associated piping — with multiple conditions attached.

“It appears that FERC is keeping them under close scrutiny,” Gary Kruse of DC-based consultancy Arbo, which closely follows US energy regulatory matters, said Friday. “This doesn’t seem like a quick and easy process even at this point.”

Market watchers are closely monitoring the progress of restarting Freeport – shut down by a fire and explosion in June — as it comprises about 17% of US LNG export capacity at roughly 2 billion cubic feet per day.

FERC's approval is based on a review of roughly a dozen filings Freeport has submitted since Dec. 21, Andrew Kohout, the director of FERC’s Division of LNG Facility Reviews and Inspections, told the company. It also followed a Jan. 25 joint site visit by staff from FERC and the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), Kohout said.

Freeport “must follow all applicable plans, procedures, and mitigation measures described in its previous submittals,” Kohout wrote. Any deviation would require that Freeport request and be granted “written approval prior to implementation.”

Kohout demanded that Freeport continue filing regular reports that illustrate “the progress toward demonstrating the facilities can safely and reliably operate as designed.” The letter stressed that “additional authorization to restart operations is necessary to reinstate service for Loop 1 LNG circulation to enable ship loading to Dock 1 and to cooldown, recommission, and reinstate service of the liquefaction trains.”

That will require another set of responses and yet more scrutiny from FERC, which reminded Freeport that all responses “be filed under oath” and be served “to each person whose name appears on the official service list for this proceeding.”

'Measured Pace'

“The filed under oath requirement would appear to make those signing them open to criminal and civil penalties for filing a false document,” Kruse told Energy Intelligence. “The requirement to serve each person whose name appears on the official service list would include the Sierra Club. So FERC may be forcing some sunshine onto those filings, although we would still expect Freeport to contest that requirement.”

Spokeswoman Heather Browne told Energy Intelligence on Tuesday that the company still expects startup by the end of this month, although liquefaction and exports would likely take longer.

In seeking permission to cool down the Loop 1 transfer piping and restart the BOG (boil off gas) management system, Freeport told FERC that process itself will take 11 days.

“If this one takes 11 days to slowly bring this line back on, how long is it going to take to bring the trains back on and make sure all that piping is working,” Kruse mused. “When FERC sent out its data request [in December] we told our customers maybe three months from then we could see it being online. That puts it in early March rather than January.”

One of the factors that makes the timeline difficult to predict is that much of the information Freeport provides to regulators is confidential.

“We just don’t know how much FERC knows at this point to know how quickly FERC can act on requests,” Kruse said. “That’s what we’re trying to judge at this point. … I think you will see over the course of time FERC’s response time becomes better because they have more information and less concerns.”

The requests for start up of Freeport's other systems will come with a timeline for regulatory review and approval and a timeline for Freeport “to actually implement it once it’s approved,” Kruse said. “Each one of those is a fairly involved process. I would think 11 days is pretty routine for most of these systems as they bring them back up. FERC is not going to want them to inject it full of gas and see if it blows up again. They’re going to expect a measured pace. That was the good thing about [Sunday’s] request. [Freeport] acknowledged the need for them to go at a measured pace.”

Policy and Regulation, LNG Supply, LNG Projects, Liquefaction
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