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Freeport LNG Receives First Re-Export Tanker

The 945-foot Clean Force liquefied natural gas (LNG) tanker arrived last Wednesday morning at the Freeport LNG receiving terminal on Quintana Island in Brazoria County, TX. It is the first vessel to come to the terminal to pick up LNG for re-export rather than deliver a cargo.

The docking of the tanker was delayed about one day due to fog in the Gulf of Mexico. As of last Thursday the tanker was ready to receive LNG owned by ConocoPhillips, Freeport LNG Vice President of Operations and Engineering Mark Mallett told NGI. Loading had yet to begin on Friday.

Clean Force has a capacity of 147,500 cubic meters. It arrived at Freeport from Gibraltar, which is located along Spain's coast at the entrance to the Mediterranean Sea.

The previous four ships to arrive at the Freeport terminal all were delivering LNG. The terminal received two commissioning cargoes in 2008 and two commercial cargoes in 2009.

Mallet said there is still LNG in storage at the terminal that could be re-exported, but the terminal has not been notified by the cargo owner of what it wants to do with it. Mallett said he doesn't know when the next tanker might arrive to deliver LNG at Freeport.

"There are some slots that have been reserved in January, but most of the time those, or all the time so far, those slots have been given up. We don't anticipate any cargoes coming in in the near future," he said.

In May the Federal Energy Regulatory Commission (FERC) approved minor modifications to facilities at Freeport to allow for the re-export of LNG (see NGI, May 11). "The ability to export foreign-sourced LNG will provide Freeport LNG with greater latitude to acquire LNG for maintenance and operation of its facilities during those periods when LNG deliveries for ultimate domestic use may not otherwise be adequate to maintain the terminal in a state of readiness to serve U.S. markets," the agency order said [CP03-75].

Cheniere Energy Inc. also has won approval from FERC to modify its Sabine Pass terminal in Cameron Parish, LA, for re-export (see NGI, June 8).

Re-export of LNG cargoes is a means of taking advantage of inefficiencies in the LNG marketplace, Cheniere CEO Charif Souki told NGI, on the sidelines of an energy conference in Houston Wednesday. "I think if you see an opportunity because there's an inefficiency in the market you take it," he said.

However, he said he does not expect the re-export of cargoes to become commonplace or to continue for long in the United States.

"There are 200 cargoes at any given time on the water, which represent about 600 Bcf worth of floating storage," he said. "Why would anybody need to go through the aggravation of doing export except in exceptional cases? All they have to do is make a phone call and say, 'Would you please divert your ship and send another one...'

"The market is immature. There are tremendous inefficiencies. You're still seeing Trinidad cargoes going to Asia and Australian cargoes coming to Europe and Egyptian cargoes coming to the United States. It makes no sense."

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