Natural gas prices in the U.S. dropped sharply from a 14-year-high on Tuesday after an important liquefied natural gas plant in Texas that has been closed since June due to a fire said it wouldn't be restarting until November.
"It is anticipated that initial production can commence in early to mid-November, and ramp up to a sustained level of at least 2 BCF [billion cubic feet] per day by the end of November, representing over 85% of the export capacity of the facility," said privately-owned Freeport LNG in a statement.
Less than three weeks ago, on Aug. 3 , Freeport said it was aiming for an initial restart by early October, so the latest restart plan announcement represents a delay of about a month or so.
The front-month natural gas contract for September delivery, which earlier Tuesday climbed above $10 /mmBtu, the highest intraday since 2008, immediately dropped after the Freeport announcement, and was recently 5.2% lower at $9.170 / mmBtu.
Even with Tuesday's price-drop, U.S. natural gas prices remain well over double what they were at the start of the year in a bull market fueled by Europe's gas-driven energy crisis, which is having a knock-on effect in the U.S.
The Freeport plant is one of the U.S.'s largest producers and exporters of LNG, and its closure can reduce the nation's LNG export capacity by some 17%, according to the government's Energy Information Administration . There are only seven LNG export facilities operating in the U.S.
Freeport said in its statement Tuesday that the recovery plan will utilize its second LNG loading dock as a "lay berth until loading capabilities at the second dock are reinstated in March 2023 , at which time we anticipate being capable of operating at 100% of our capacity."
It remains unclear exactly what caused the fire in early June that led to the plant's closure. In a previous statement, the company said that "preliminary observations suggest that the incident resulted from the overpressure and rupture of a segment of an LNG transfer line, leading to the rapid flashing of LNG and the release and ignition of the natural-gas vapor cloud."
