LNG plant blast cripples US gas exports

One of the largest US plants that produces liquefied natural gas for export has been damaged by an explosion and fire, forcing the Texas Gulf Coast facility to cease operations in a move expected to affect European and Asian markets.

“As a result of today’s fire, Freeport LNG’s liquefaction facility is currently shut down and will remain shut down for a minimum of three weeks,” the company announced on Wednesday night, providing no further details.

Earlier in the day, the company acknowledged an “incident” at its facility in Quintana, some 70 miles (112 kilometers) south of Houston, but said none of the employees were injured, and that there was no risk to the community. 

The exact cause of the fire and extent of the damage remain unclear. After some witnesses reported a loud bang and a large fireball in the area, aerial footage captured by local TV broadcasters showed firefighters at the facility, but there were no signs of open flames.

The Freeport facility supercools and liquifies about 2 billion cubic feet of natural gas per day, or roughly 20% of the entire US export capacity. Overall, American LNG exports were around 9.75bcf per day in 2021, hitting a record total of 100 billion cubic meters that year, according to the Energy Information Administration.

Local US natural gas prices tumbled more than 6% on Wednesday, but the incident is expected to have the opposite effect and wider ramifications for global markets.

READ MORE: What are EU’s chances of surviving without Russian gas?

Europe in particular is already facing a major energy crisis as a result of the post-pandemic disruption to supply chains along with an unprecedented Western sanctions campaign imposed on Moscow. Despite all efforts to cut ties, the EU still receives some 40% of its total natural gas imports from Russia, mostly via pipelines, having bought around 155 billion cubic meters in 2021. 

Meanwhile, US exports to the EU were a little over 22 billion cubic meters last year. President Joe Biden allegedly promised to increase LNG deliveries by 15 billion cubic meters in 2022, but some analysts say the US is already producing the commodity at full capacity, and that any additional gas sales to Europe would have to be taken from exports initially intended for other buyers.

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