Inspections have shown that a fire last month at Equinor ASA’s Hammerfest liquefied natural gas (LNG) terminal in northern Norway will require at least a year’s worth of work to repair, the company said Monday.
The fire broke out in the air intake of one of the plant’s five power turbines, which caused extensive damage, Equinor said. Large amounts of seawater were also pumped in to extinguish the blaze, which caused damage to the facility’s electrical equipment and cables.
“Although a lot of inspection work still remains and there is still significant uncertainty, our best estimate now is that it may take up until Oct. 1, 2021 to get Hammerfest LNG back into production,” said plant director Andreas Sandvik.
The duration of the shutdown is also likely to depend on the delivery time of necessary equipment and work that is to be conducted amid Covid-19 restrictions.
“We will use the shutdown period to also carry out other maintenance and repair work planned for 2021,” Sandvik said. That work would include ongoing maintenance and other activities that had been planned for next spring.
The 4.3 million metric tons per year Hammerfest facility receives and liquefies natural gas from the Snohvit field in the Barents Sea. It is Europe’s largest liquefaction terminal.
The prolonged outage comes at a time when global gas prices are finally rebounding. The Dutch Title Transfer Facility (TTF) contract for December delivery closed at $5.424/MMBtu on Friday. Meanwhile, the prompt contract for the UK’s National Balancing Point (NBP) closed at $5.998. The last time the TTF prompt closed that high was in April 2019, while the NBP prompt hasn’t closed that high since February 2019, according to NGI data.
The Japan Korea Marker futures contract, the benchmark for Asian natural gas, has skyrocketed in recent weeks, closing Friday at $7.250 for December, a high not seen for the prompt since February 2019. Colder weather, additional supply outages in Norway and problems at other plants across the world like those on the Gulf Coast and at Gorgon LNG in Australia have driven prices up.
“Lower production in Norway and concerns that LNG supply will be limited during the winter are the main concerns, with prices in Asia so high that LNG tankers could be shipped there instead of to Europe during the coming months,” said trading firm Energi Danmark on Monday of rising natural gas prices.
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