Will Freeport LNG Fire Cause NatGas Prices to Drop to 2021 Levels?
Have you been watching the NYMEX Henry Hub futures price? It’s been dropping like a rock since last week when a fire caused Freeport LNG and its 2 Bcf/d of exported LNG to go offline (see NYMEX NatGas Down 20% in Single Day on Freeport LNG Bad News). Freeport will be largely offline for most of the balance of 2022. We spotted a post by an analyst on the Seeking Alpha investor’s website talking about the Freeport situation and its impact on the price of natural gas (specifically on the UNG ETF). The analyst had some interesting things to say about how and whether the Freeport situation will affect natgas prices here at home.
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Freeport LNG provided an update yesterday to inform the public about what happened at its export facility just south of Galveston, Texas, situated on the Gulf Coast. Freeport said an “incident” occurred in pipe racks that support the transfer of LNG from the facility’s LNG storage tank area to the terminal’s dock facilities located on the intracoastal (i.e., north) side of Freeport LNG’s dock basin. None of the liquefaction trains, LNG storage tanks, dock facilities, or LNG process areas were impacted. Freeport originally said the facility would be back online in three weeks. That’s a pipe dream (pun intended). Yesterday Freeport revised their estimate to three months minimum before partial operations are back online. It will be the end of the year for full operations exporting all 2 Bcf/d are back online, according to Freeport.
In years gone by arrogant Europeans turned their noses up to American “fracked” LNG (see 
Last week MDN told you about the June 8th explosion and fire at Freeport LNG located near Galveston, the second-largest LNG export terminal in the U.S. (see 
We spotted news that the country of Ukraine, under attack by Russia, has cut a deal (a memorandum of understanding) with Canada’s Symbio Infrastructure to import LNG and green hydrogen. Symbio is building a 10.5 million mt/year LNG export facility in Quebec and will export the LNG and H2 from there. Wait just a minute…Quebec (the province) recently passed a new law outlawing all oil and natural gas production throughout the province (see 
EQT CEO Toby Rice is and has been on a mission–to spread the gospel of LNG (see 
The number-crunchers at our favorite government agency, the U.S. Energy Information Administration, published their analysis of LNG exports for the first four months of 2022. Unsurprisingly, because of the Ukraine war, EIA found that 74% of the LNG exported from the U.S. during that time has gone to Europe. It’s pretty much a reversal of last year when 34% of our LNG went to Europe. Last year most of our LNG went to Asia–China and South Korea. The percentages of how much U.S. LNG goes to Europe and how much goes to Asia have changed places over the past year.
Broadcasting its intent to expand aggressively in the LNG export market, Chesapeake Energy is advertising to hire a liquefied natural gas (LNG) advisor. The LinkedIn ad shows that so far 41 people have applied. The ad opens by saying the company is looking for “a lead for new business opportunities for Chesapeake for liquified natural gas (LNG) and provides guidance on LNG Marketing activities in order to optimize the company’s revenue.” And hey, good news: The job can be 100% remote!
Energy Transfer (ET) has signed a fifth customer to accept shipments of LNG produced by ET’s yet-to-be-constructed LNG export facility in Lake Charles, Louisiana, located on the Calcasieu ship channel. Yesterday (yes, on a Sunday), ET issued a press release to announce a 25-year deal with China Gas to purchase 0.7 million tonnes (MT) of LNG per year on a free-on-board (FOB) basis. Added with the other deals, ET has now pre-sold 5.8 MT per year of the site’s planned capacity to produce 16.45 MT per year, meaning 35% of the capacity is now spoken for. More than a third of the way there!
According to Reuters analyst John Kemp, if the U.S. wants to keep growing its LNG exports, the amount of natural gas we produce will also have to grow. If natgas production falls behind, as it is now, prices will continue to skyrocket. LNG exports were up an astonishing 87% for the first three months of this year compared with 2019 (three years ago). Domestic consumption of natgas is pretty much the same year after year. The thing increasing year after year is exports–both LNG and pipeline exports to Mexico.
We’ve talked plenty about the big LNG export facilities scattered mostly along the Gulf Coast that export a fair amount of Marcellus/Utica molecules (and two LNG export sites situated on the East Coast, both of which export 100% M-U molecules). Every now and again we talk about some of the smaller LNG export operations, including Eagle LNG in Florida, which uses at least some M-U molecules. The experts at RBN Energy have a new post exploring “small-scale” LNG producers, including Eagle and three other companies that own and operate a number of small facilities. As with Eagle, these smaller players are potential customers for M-U molecules.
Despite screaming and howling at the moon by leftist Big Green groups, including the Sierra Club and Public Citizen, the Federal Energy Regulatory Commission (FERC) last week issued orders allowing two huge new LNG export facilities extra time to complete building those projects. On May 6, FERC issued a 31-month time extension to Cheniere Energy to build its third train (“Stage 3”) project at the existing Corpus Christi Liquefaction facility. FERC issued a three-year time extension to Energy Transfer’s Lake Charles LNG project. Both facilities have the potential to be fed, in part, by Marcellus/Utica molecules.