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Cheniere, PHMSA Reach Agreement on Sabine Pass LNG Tank Leaks

Cheniere Energy Inc. has been given authority by federal regulators under a modified timetable to determine what caused the leaks discovered earlier this year at two liquefied natural gas (LNG) storage tanks at its Sabine Pass export terminal in Louisiana.

Under a consent agreement and order issued last Friday by the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA), Cheniere agreed to conduct a root cause failure analysis (RFCA) and a repair and modification plan for one of the two tanks that leaked, S-103. The agreement also calls for Cheniere to reseal the annular plate for a second tank, S-101.

Cheniere will be required to prepare a fitness-for-service plan for S-101 that meets certain technical requirements. It also is required to mechanically disable the bottom-fill line valve and monitoring temperatures within the tank's annular space, and include an alarm that would be triggered when conditions exceed S-101's design parameters. The company must also evaluate S-101 to determine whether the tank has similar characteristics of the S-103 that caused the leaks.

PHMSA and Cheniere agreed that a qualified, independent third party will conduct and complete the RFCA for S-103 by May 31. The third party will also perform an assessment of all five storage tanks at Sabine Pass, and submit a final report to PHMSA's Southwest Region director outlining any recommendations.

The agreement also stipulates that within 120 days of completing the final RFCA for S-103, Cheniere must evaluate the remaining three tanks -- S-102, S-104 and S-105 -- and their associated systems to determine whether any additional action is warranted, in light of the RFCA's findings.

Cheniere expects to eventually return all five tanks to service.

“Cheniere’s goal has been to safely and quickly address this incident, and believes there is not, and has not been, a public safety threat," Cheniere spokesman Eben Burnham-Snyder told NGI. "The consensual agreement now in place is focused on bringing [S-101] safely back into service, continuing our root cause analysis, and pursuing a repair plan to bring [S-103] back into service. Cheniere remains committed to a continued productive relationship and ongoing collaboration with PHMSA."

Last February, PHMSA issued a corrective action order (CAO) requiring 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. The next month, representatives from PHMSA and Cheniere met in Houston to discuss next steps over the issue.

PHMSA's original CAO included requirements that Cheniere complete the RFCA within 120 days, and evaluate the three tanks that did not leak within 60 days of completing the RFCA.

According to PHMSA, Cheniere employees discovered that LNG had leaked into the annular space between the inner and outer walls of 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 S-101.

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