Freeport LNG Terminal

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Freeport LNG is an LNG export terminal in Freeport, Texas.

Location

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Export Project Details, Trains 1-3

• Owners:
  • T1: Freeport LNG Liquefaction, LLC
  • T2: Freeport LNG Liquefaction 2, LLC
  • T3: Freeport LNG Liquefaction 3, LLC
• Parent: Zachary Hastings, Osaka Gas, Dow Chemical Company, Global Infrastructure Partners, Freeport LNG
• Location: Freeport, Texas, United States
• Coordinates: 28.932003, -95.317355 (exact)
• Capacity: 15 mtpa (5mtpa per train)
• Status: Operating
  • Formerly Idle (fully or partially) between June 2022 and June 2023 due to a fire
• Type: Export
• Trains: 3
• Cost: US$13.5 billion
• 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)
• Start Year: 2019

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

Export Project Expansion Details, Train 4

• Owner: Freeport LNG Development
• Parent: Zachry Hastings, Osaka Gas, Dow Chemical Company, Global Infrastructure Partners, Freeport LNG
• Location: Freeport, Texas, United States
• Coordinates: 28.932003, -95.317355 (exact)
• Capacity: 5.1 mtpa
• Status: Proposed
• FID Status: Pre-FID (2023)
• Type: Export
• Trains: 1
• Financing: US$1 billion loan from Westbourne Capital
• Start Year: 2028
  • Formerly 2026

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

Import Project Details

• Owner: Freeport LNG Development
• Parent: Zachry Hastings, Osaka Gas, Dow Chemical Company, Global Infrastructure Partners, Freeport LNG
• Location: Freeport, Texas, United States
• Coordinates: 28.932003, -95.317355 (exact)
• Capacity: 13.2 mtpa
• Status: Mothballed
• 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.

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.

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.

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.

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. As of February 2019, construction for the export terminal was ongoing, and pre-commissioning had begun for Train 1. By February of 2020, Freeport LNG had begun shipping cargoes, suggesting that the export terminal is operational.

As of February 2020, the commissioning of Train 4 wasn't expected until 2024. 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. In May 2020, Train 3 commenced commercial operations marking the full commercial operation of the three-train facility.

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." In September 2020, FERC approved Freeport LNG's request for three more years - until May 2026 - to complete the proposed fourth liquefaction train.

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.

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."

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

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.

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

In July 2022, the U.S. Department of Energy authorized Freeport LNG to expand its exports to Free Trade Agreement (FTA) countries to 1,022.0 Bcf/y and to non-FTA countries to 1,044.8 Bcf/y.

In October 2022, FERC granted Freeport LNG an extension through August 2028 to complete construction of the proposed fourth train.

In April 2023, the Texas Commission on Environmental Quality fined Freeport LNG $152,173 for violating state air pollution emissions rules for periods between 2019 and 2021. Emissions exceeding allowable levels included carbon monoxide, hydrogen sulfide, nitrogen oxides, sulfur dioxide and volatile organic compounds.

In May 2024, Japan's Jera announced that it would sell 15% of its 25.7% stake in Freeport LNG Development to a U.S. unit of Japan Petroleum Exploration (Japex) for about US$380 million.

Debottlenecking Project

In the summer of 2023, Freeport LNG began the first of two debottlenecking phases. The second phase is expected to be completed in summer 2024.

The debottlenecking project comprises the installation of additional compressor capacity across each of the facility’s three trains. It is expected to increase Freeport LNG's export capacity from 15 mtpa to 16.5 mtpa.

Outages

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. GIIGNL reports that the incident was "due to an overpressure and rupture of a segment of an LNG transfer line connecting the facility’s LNG storage tanks to its dock facilities." 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 was targeting October to restart the facility.

Following a series of anticipated and delayed restarts, Freeport LNG received regulatory approval to restart its three trains between January and March 2023. As of June 2023, all trains were back online.

2024 Outages

As of May 2024, Freeport LNG said all three of its trains were back in service. Only the third train had been in service since March, after inspections were conducted on trains 1 and 2, following damage to a train 1 motor following a January freeze. Train 1 had been out of service due to this issue between January and March 2024.

In July 2024, Freeport LNG was shut down due to Hurricane Beryl. The terminal was back online by the end of the month.

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. 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.

In January 2021, the Export-Import Bank of the United States (EXIM) approved a 90% guarantee of a US$50 million loan to Greensill Capital, which agreed to provide the funds in supply-chain financing to Freeport LNG. Greensill Capital collapsed just two months later, calling into question EXIM's due diligence around the transaction.

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.

In December 2023, the Export-Import Bank of the United States (EXIM) approved a $90 million guarantee under EXIM’s Supply Chain Finance Guarantee Program to ING Capital to finance U.S. exporter Freeport LNG Marketing.