The restart of one liquefied natural gas (LNG) export project in Louisiana, Cameron LNG, could occur this month, but some are warning in a worst-case scenario, the facility could be offline until November.
The terminal was shuttered in late August by Hurricane Laura. Majority owner Sempra Energy has not said when the 2.3 Bcf/d facility would come back online. The terminal was not significantly damaged, according to Sempra, even though Laura made landfall with 150 mph winds.
Cameron buys power from Entergy Corp., rather than producing electricity from natural gas like most other domestic terminals, and its restart is awaiting restoration of the regional grid. In addition, the facility is about 19 miles north of the Gulf Coast along the Calcasieu Ship Channel, which was clogged by debris and requires dredging to allow LNG vessels to traverse.
“We have heard that Cameron is telling lifters they probably won’t be back up until the end of this month,” said Poten & Partners’ Jason Feer, global head of business intelligence.
Sempra initially planned to build Cameron with 10 gas-fired turbines to produce electricity on site. However, it was redesigned to be less vulnerable to storms and to reduce its environmental footprint, according to a document Sempra filed with the Federal Energy Regulatory Commission in April 2013.
Entergy built a 12-mile, 230 kV transmission line to Louisiana’s Calcasieu and Cameron parishes, and in May 2013, Sempra signed a deal to supply up to 200 MW.
Entergy said Monday it expects to restore power to most customers in southwestern Louisiana by Sept. 23. Power to remaining customers that can safely receive it is expected by month’s end. About 48,500 customers in southwestern Louisiana did not have power on Monday, Entergy said. Hurricane Sally was forecast to make landfall Wednesday along the Mississippi-Alabama border, potentially sparing southwestern Louisiana.
EBW Analytics Group said in a note last week on Sept. 8 of October and November New York Mercantile Exchange gas futures, while the rest of the curve retreated modestly, suggested the market was “pricing-in a worst-case scenario, in which power is not restored for up to two months, delaying restart of Cameron until late October or early November.” Such a scenario could not be ruled out, but was unlikely, analysts said.
EBW analysts said the timing of the necessary dredging was uncertain, but based on prior weather events, it could be completed within two weeks.
The Port of Lake Charles said last week the Calcasieu Ship Channel had been reopened to vessels with a maximum draft of 30 feet, rather than the normal 40 feet needed for LNG vessels.
Entergy’s latest status update indicates that power restoration to Cameron is possible within two weeks, BTU Analytics LLC energy analyst Connor McLean told NGI.
“Given that Cameron LNG has not reported any damage, it would seem that a November return might be on the pessimistic side,” McLean said. He said it was unclear how long it might take to complete dredging.
Feer told NGI that global LNG demand looks strong for the next two months, but there is some weakness seen for early 2021.
“Demand seems soft everywhere,” Feer said, “which fits a pattern of strong demand after lockdowns are lifted, followed by middling demand as most economies have not gotten back to where they were before the outbreak.”
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