Freeport LNG Terminal

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Freeport LNG is an LNG import terminal in Freeport, Texas.

Location

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Export Project Details, Trains 1-3

  • Owners:
    • T1: Freeport LNG Liquefaction, LLC[1]
    • T2: Freeport LNG Liquefaction 2, LLC[1]
    • T3: Freeport LNG Liquefaction 3, LLC[1]
  • Parent: Zachary Hastings, Osaka Gas, Dow Chemical Company, Global Infrastructure Partners, Freeport LNG[2][3]
  • Location: Freeport, Texas, United States
  • Coordinates: 28.932003, -95.317355 (exact)[4]
  • Capacity: 15 mtpa (5mtpa per train)[1]
  • Status: Idle[5]
  • Type: Export
  • Trains: 3[2]
  • Financing: Initial project financing in 2014 from Japan Bank for International Cooperation (UD$2.6 billion) and from various Japanese commercial banks and Dutch bank ING (US$1.67 billion), with the private financing portion insured by Nippon Export and Investment Insurance (NEXI)[6]
  • Start Year: 2019[2]

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Export Project Expansion Details, Train 4

  • Owner: Freeport LNG Development[2]
  • Parent: Zachry Hastings, Osaka Gas, Dow Chemical Company, Global Infrastructure Partners, Freeport LNG[2]
  • Location: Freeport, Texas, United States
  • Coordinates: 28.932003, -95.317355 (exact)[4]
  • Capacity: 5.1 mtpa[7]
  • Status: Proposed, Pre-FID[8]
  • Type: Export
  • Trains: 1
  • Financing: US$1 billion loan from Westbourne Capital[9]
  • Start Year: 2026[10]

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Import Project Details

  • Owner: Freeport LNG Development[2]
  • Parent: Zachry Hastings, Osaka Gas, Dow Chemical Company, Global Infrastructure Partners, Freeport LNG[2]
  • Location: Freeport, Texas, United States
  • Coordinates: 28.932003, -95.317355 (exact)[4]
  • Capacity: 13.2 mtpa[11]
  • Status: Unknown
  • Type: Import
  • Start Year: 2008

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Freeport LNG Development, L.P. designed, built and operates the Freeport LNG import terminal in Freeport, Texas. ConocoPhillips bought two-thirds of the capacity of Freeport LNG and Dow Chemical the remaining third. Construction began in 2005 and was completed in 2008.[12]

After the US fracking boom, Freeport LNG filed two DOE applications, each for 511 Bcf/year in December 2010 and 2011, and received approval from DOE to export LNG to Free Trade Agreement countries in February 2011 and 2012. In December 2010, Freeport LNG also submitted a pre-filing request with FERC to begin the environmental review of the liquefaction project. The project would transition the import terminal into an export terminal.[12]

Freeport LNG intends to file its formal application pursuant to Section 3 of the Natural Gas Act (NGA) by August 2012 and will request that FERC authorize by 2013. Freeport LNG anticipates a construction schedule of approximately three to four years, beginning in early 2017.[12]

On May 17, 2013, the DOE gave the green light to Freeport LNG Expansion and FLNG Liquefaction’s proposal to send 1.4 billion cubic feet per day of natural gas overseas for 25 years, allowing export to nations that do not have a free-trade agreement with the U.S. The decision came less than 24 hours after the Senate confirmed Energy Secretary Ernest Moniz, author of a 2011 MIT report on natural gas that advocated its export.[13]

Construction of the export terminal started in late 2014. The first three production trains will add approximately 15 million metric tonnes per year (mtpa) of nominal liquefaction capacity to the Quintana Island terminal facilities. An additional LNG train (Train 4) is under development.[14] As of February 2019, construction for the export terminal was ongoing, and pre-commissioning had begun for Train 1.[15] By February of 2020, Freeport LNG had begun shipping cargoes, suggesting that the export terminal is operational.[16]

As of February 2020, the commissioning of Train 4 wasn't expected until 2024.[17] In April 2020, the energy and shipping brokerage Poten & Partners disclosed that the final investment decision (FID) for Train 4 had been delayed beyond the original FID timing of 2020. It cited COVID-19, plunging demand and the crash in oil prices as the reasons for the delay. [18] In May 2020, Train 3 commenced commercial operations marking the full commercial operation of the three-train facility.[19]

In August 2020, Reuters reported that Freeport LNG had asked FERC for an additional three years until May 2026 to complete Train 4. According to a Freeport spokesperson, "Given the current market conditions resulting from COVID-19, Freeport LNG does not expect to reach FID on Train 4 this year, we can be ready to start construction by mid-2021, if market conditions improve."[10] In September 2020, FERC approved Freeport LNG's request for three more years - until May 2026 - to complete the proposed fourth liquefaction train.[20]

Supply contracting for Train 4 initially saw a preliminary agreement signed in 2018 by Japan's Sumitomo for the purchase of 2.2 million mt/year of LNG from Train 4. This agreement expired without being finalized. In March 2021, Freeport LNG CEO Michael Smith said that the company had recently seen renewed interest from buyers in long-term contracts tied to Train 4, but did not provide details about these potential buyers.[21]

In June 2021, Smith made further optimistic comments about ongoing sales contract discussions with potential buyers which could be finalised by the end of the year. The company would be able to reach FID for Train 4 by summer 2022 if it gets at least 75% of the liquefaction train's approximate 5 million mt/year capacity sold to the commodity traders, utilities, and other end-users that Freeport LNG has been talking to. Smith also hit out at European buyers who would be unlikely to agree to further sales agreements, saying, "[Europe] is a tough market to crack because they are so ESG bonkers and there's a lot of governments that don't want US shale gas, I think, even if you do carbon sequestration for some of them."[22]

In mid-September 2021, a power outage caused by Tropical Storm Nicholas led to all three liquefaction trains at the plant going offline.[23] The timing of the terminal's startup remained unclear as of September 17.[24]

In November 2021, Freeport announced plans to develop a carbon capture and sequestration (CCS) project adjacent to Freeport LNG's gas pretreatment facilities located near Freeport, Texas, on the Gulf Coast, approximately 60 miles southwest of Houston, Texas.[25]

The 2022 IGU World LNG report states that Freeport LNG T4 was signaling FID in 2022.[3]

Fire at Freeport LNG

In June 2022 a fire and explosion occurred in a pipe rack near the LNG storage tanks at the liquefaction facility. An estimated 120,000 cubic feet of LNG was reported to be released within the facility. There were no reported injuries. The facility was taken offline and the U.S. Pipeline and Hazardous Materials Safety Administration stated that corrective actions must be taken before it is restarted. As of August 2022, Freeport LNG is targeting October to restart the facility.[5]

Financing

In April 2015 Freeport LNG secured the final piece of financing for its $12.5 billion liquefied natural gas export terminal, placing the company on track to begin producing by early 2018 and fully operational by 2019.[26] Since the initial project finance support, Trains 1 to 4 have been supported via multiple bond issues and refinancing deals running into several billion dollars which have been provided and facilitated by a wide range of international commercial banks, most commonly the Japanese banks Mitsubishi UFJ Financial Group, Mizuho and Sumitomo Mitsui Banking Corporation.

In September 2019, Freeport LNG secured a loan of approximately US$1 billion from Westbourne Capital, an Australian investment manager, to cover the cost of Train 4 construction.[9]

In November 2021, Japan's largest power generation company JERA announced that it would take a 25.7% equity stake in Freeport LNG Development. JERA will also work with FLNG to advance new LNG projects, including production capacity expansion and the development of Train 4.[27]

Articles and resources

References

  1. 1.0 1.1 1.2 1.3 International Group of Liquefied Natural Gas Importers (May 24, 2022). "Annual Report 2022 Edition" (PDF). GIIGNL. Retrieved July 11, 2022.
  2. 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2020 World LNG Report, page 102, International Gas Union, April 27, 2020
  3. 3.0 3.1 "World LNG Report 2022". International Gas Union. July 6, 2022. Archived (PDF) from the original on July 11, 2022. Retrieved July 11, 2022.
  4. 4.0 4.1 4.2 "Contact & Media | Contact Us and Locations | Freeport LNG". freeportlng.com. Retrieved 2021-01-13.
  5. 5.0 5.1 "Freeport LNG reaches agreement with US on corrective actions following June fire". Retrieved 2022-08-04.
  6. Project Financing for Freeport LNG Project in U.S., Japan Bank for International Cooperation press release, Oct. 30, 2014
  7. Freeport LNG’s Train 1 start-up delayed LNG World News, April 20, 2018.
  8. U.S. Liquefaction Capacity, Energy Information Administration, November 3, 2020
  9. 9.0 9.1 Harry Weber, Freeport LNG sees loan deal as lift to Train 4 expansion prospects, S&P Global, Sep. 9, 2019
  10. 10.0 10.1 Scott DiSavino, Freeport seeks more time to build Train 4 at LNG export plant in Texas, Reuters, Aug. 3, 2020
  11. The LNG Industry: Annual Report 2020, page 48, International Group of Liquefied Natural Gas Importers, accessed April 29, 2020
  12. 12.0 12.1 12.2 "Freeport LNG Export project," Freeport LNG Development, accessed April 2012.
  13. Zack Colman, "DOE gives green light to controversial natural gas export project," The Hill, May 17, 2013.
  14. Freeport LNG: Taking U.S. Natural Gas Global Freeport LNG, accessed July 16, 2019.
  15. From Land to Liquefaction: Pre-commissioning is here The Isle Magazine, February 2019.
  16. U.S. weekly LNG exports for third week running LNG World News, February 21, 2020.
  17. US hopes for robust second wave of LNG supply could dim: Freeport LNG’s Smith Hellenic Shipping News, February 14, 2020
  18. John Snyder FID's delayed by global uncertainty, Riviera Maritime Media, Apr. 24, 2020
  19. Freeport LNG starts Train 3 operations, Riviera Maritime Media, May 6, 2020
  20. Scott DiSavino, Freeport gets more time to build Train 4 at LNG export plant in Texas, Reuters, Sep. 10, 2020
  21. Harry Weber, Corey Paul, CERAWEEK: Buyers said to renew interest in supplies from Freeport LNG Train 4, S&P Global, Mar. 3, 2021
  22. Harry Weber, Freeport LNG optimistic it could get support for Train 4 by end of year: CEO, S&P Global, Jun. 29, 2021
  23. Scott DiSavino, Freeport's Texas LNG export plant still offline after Storm Nicholas, Reuters, Sep. 15, 2021
  24. Harry Weber, Freeport LNG sets initial steps to resume service after hurricane struck Texas, S&P Global, Sep. 17, 2021
  25. LNG, Freeport. "Freeport LNG And Talos Energy To Develop Carbon Capture And Sequestration Project On Texas Gulf Coast". www.prnewswire.com. Retrieved 2021-11-17.
  26. "Massive Freeport LNG project chugs forward with $12.5 billion in its back pocket" Fuel Fix, Rhiannon Meyers, April 28, 2015.
  27. Kumagi, Takeo (2021-11-15). "Japan's JERA takes 25.7% stake in US Freeport LNG, expects extra 820,000 mt/year equity access". www.spglobal.com. Retrieved 2021-11-19.

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