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Cheniere Looking to Resolve PHMSA’s LNG Tank Leak Issues Before Hearing

Federal regulators have agreed to hold a hearing this month to discuss an order issued in February to Cheniere Energy Inc. to shut down two of five storage tanks at the Sabine Pass liquefied natural gas (LNG) export terminal in Louisiana. Meanwhile, Cheniere management is hoping to quickly resolve the issues.

In a corrective action order (CAO) issued on Feb. 8, the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) ordered Cheniere to shut down the tanks and "take certain corrective actions" after employees discovered on Jan. 22 that LNG had leaked from one tank at the Cameron Parish, LA, facility.

An attorney for Cheniere requested that PHMSA schedule a hearing within 60 days to discuss the CAO. However, attorney Kevin Ewing of Bracewell LLP said the company "expects to withdraw its request for a hearing if the parties can reach satisfactory resolution of these matters in the interim."

Ewing's letter to PHMSA said Cheniere "continues to be working cooperatively with PHMSA informally to develop insight into the root cause of the incident."

Cheniere spokesman Eben Burnham-Snyder confirmed to NGI that PHMSA has scheduled a hearing for March 21. "Our intent here is to be as proactive and productive with PHMSA as possible," Burnham-Snyder said Thursday. "We think that this is an incident that can be resolved in a expedient way, while always reserving the right to have that hearing."

According to PHMSA, Cheniere employees discovered that LNG had leaked into the annular space between the inner and outer walls of one tank, S-103. The leak eventually caused a crack in the outer tank wall, allowing LNG to pool in a secondary containment area around S-103. A subsequent investigation by PHMSA found that LNG had also leaked from a second tank, S-101.

PHMSA also reported that all five tanks at Sabine Pass were designed by Mitsubishi Heavy Industries Ltd. Three tanks placed into service in 2008 were built by Matrix Service Inc., while two tanks built by Zachry Industrial Inc. went into service in 2009. The two leaking tanks were built by Matrix; the third Matrix-built tank did not have any leaks and remains in service.

There were no injuries from the incident. Each of the five tanks at Sabine Pass has a capacity of 3.4 Bcfe, for a total of 17 Bcfe.

Cheniere has been ordered by PHMSA to conduct a root cause analysis, assess whether the issues discovered at the two tanks apply to the other tanks and develop plans to repair or modify them. Cheniere also has been ordered to provide records of any other leaks or events in which the tank systems were operated "outside design specifications."

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