An explosion rocked the Freeport LNG liquefaction plant yesterday morning, with the causes still unclear. The investigation is ongoing, but according to the facility manager, Freeport LNG, the facility will remain closed for weeks. It accounts for one-fifth of the total US liquefaction capacity. The Freeport facility has three liquefaction trains and a quarter is under construction. Its current gas processing capacity is 2.1 billion cu ft per day. With the shutdown, the situation with US LNG exports will become problematic, as evidenced by the reaction of the gas market to the news of the explosion. Initially, prices fell as traders worried that the outage would reduce the market share of US LNG, according to a report by the Financial Times earlier today. Bloomberg noted that the fire means that a lot of natural gas will remain trapped in the fields amid growing demand for natural gas abroad. However, prices in international LNG markets may react differently, because the LNG shutdown at Freeport essentially means there will be less natural gas to export, especially to Europe and Asia, with 30 energy streams. In Europe, gas prices are falling in recent days as the beginning of summer reduced direct demand. The abundant supply of LNG also contributed to the price trend. By stopping, this trend may at some point be reversed. Asian demand, however, is rising sharply as buyers seek to build up stocks for the winter, Bloomberg, which further supports prices, said this week. “LNG prices remain well above normal, even adjusting for higher crude oil prices,” Sanford C. Bernstein analysts said in a statement, according to Bloomberg. “We expect this to be a calm before what looks like a harsh winter ahead for consumers.” By Irina Slav for Oilprice.com More top readings from Oilprice.com:
