Thursday, June 30, 2022

Explosion Shuts Down Texas LNG Plant

An explosion Wednesday (June 10) at the Freeport gas liquefaction plant south of Houston, Texas has shut down the facility for at least three weeks, bringing new uncertainties and higher costs to global gas markets while plant operators search for the cause of the blast.

No injuries were reported, and all staff and contractors were accounted for, Climate Nexus reports. But residents of nearby Surfside felt and heard the explosion, and a nearby beach and park had to be evacuated.

The plant accounts for about 20 percent of US LNG processing capacity, Reuters says.

“We were in our home. We felt the ground shake and it was like rolling thunder. That’s what it sounded like,” said Surfside resident Maribel Hill. “My husband flew out the door and said ‘there’s an explosion over at the LNG.’”

KHOU 11 reported that the incident had been contained and there were “no shelter in place or evacuation measures in place for nearby residents.” But Freeport resident Melanie Oldham, founder of Citizens for Clean Air and Clean Water in Brazoria County, said the next incident could be worse.

“This is dangerous business,” she warned in a statement. “What kind of air monitoring are they doing out there? Will they even be able to tell what the explosion released? And will they tell us?”

The explosion and the resulting outage “has triggered alarm bells among players in a market already struggling with reduced Russian supplies and resurgent demand in Asia,” Reuters writes. The plant, which opened in 2002, “historically sent most of its cargoes to Japan and Korea, but the outage will affect Europe, which has been pulling U.S. cargoes from the east” due to higher prices brought on by Russia’s war in Ukraine.

“An outage for three weeks minimum is a loss of around 940,000 tonnes of LNG,” analyst Alex Froley of data intelligence firm ICIS told the news agency. “If you took an average cargo size around 70,000 tonnes, that’s about 13 cargoes.”

Reuters says the news boosted European gas prices by about one-fifth, but the news actually drove down costs in the US, where price speculators reckoned the outage “would free up supplies and help rebuild US storage for winter demand.”

But there’s another factor at play in the US “The unrelenting heat wave across the southwest, from California to Texas, is expected to cause gas prices to continue to climb,” Climate Nexus notes. “If the trend continues, analysts predict domestic gas prices could hit double digits, further raising costs for consumers,” and there’s also continuing concern that Texas’ troubled power grid is will be in trouble in a serious heat wave. Vox says it’s “designed to fail”.

On CBC, meanwhile, analysts Sara Hastings-Simon of the University of Calgary, Arvind Ravikumar of the University of Texas, and Shuting Yang of the Harrisburg University of Science and Technology argue that LNG is a temporary energy solution at best—certainly not the long-term supply option touted by the fossil industry interests and often echoed by the federal government in Ottawa.

“Under the right conditions, additional LNG can reduce power sector emissions but only if there is sufficient existing coal-based generation to substitute. Otherwise, the new supply of natural gas ends up displacing lower-emitting sources such as renewables or nuclear,” they write.

Which means that “by the 2030s, additional LNG becomes a problem for a world that is cutting emissions to meet its climate goals. It would either create stranded assets out of costly new LNG export terminals or lock in emission growth that takes us in the wrong direction on climate change.”

They warn that LNG expansion would signal future global warming to somewhere under 3.0°C, far off the 1.5° target for keeping the worst effects of climate change under control, adding that warming above even 2.0° “will result in dramatically worse consequences for Alberta and the world.”

This article appeared in The Energy Mix.

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