US Cameron LNG outage continues while Sabine restarts

HOUSTON (ICIS)–Efforts to restore operations at the three-train Cameron LNG plant in Louisiana continue, three weeks after a major hurricane struck the US Gulf Coast.

As of 16 September, the lack of waterway access to Cameron using the Calcasieu channel and power supply issues were among the main issues hindering a restart.

Total US LNG exports in September are still forecast to reach the highest level since May as other production ramps back up and with fewer cargo cancellations than for June to August loading.

Cameron LNG, which is located on the northwestern edge of Calcasieu Lake, is located just south of Lake Charles, one of the hardest-hit areas from Hurricane Laura.

The storm made landfall on 27 August.

Operations were suspended days before the hurricane struck, affecting both Cameron LNG and Cheniere’s Sabine Pass in nearby Cameron Parish, Louisiana.

WATERWAY

Waterway access was blocked at both plants given the amount of debris and storm-related wreckage that clogged the channels.

This meant recovery efforts to remove the debris, to carry out dredging, follow-up surveys and sounding tests to ensure water depth would be restored for marine traffic.

Waterway access to Sabine Pass through the Sabine channel was cleared more quickly, which allowed operations to resume more quickly.

Sabine Pass loaded its first cargo since the storm on 9 September, after a 17-day hiatus.

For the Calcasieu channel, estimates for marine access now extend to mid-October, as dredging work continues for both the outer and inner parts of the channel to allow for vessels requiring 40 feet, or 12m, draft. This would include laden LNG vessels.

This part of the channel is more narrow and therefore requires the deeper draft, said a source.

POWER OPERATIONS

Sabine Pass also independently powers its own site and was able to resume operations despite widespread power outages in the region.

Louisiana power provider Entergy has been repairing major transmission lines that were damaged from the storm.

Entergy last estimated on 14 September that power could be restored within southwest Louisiana by the end of September.

LNG IMPACT 
Market sources said that an earlier force majeure been imposed by Cameron LNG through to 20 September would likely be extended for given the water access issues.

France-based Total and Japanese trading houses Mitsui and Mitsubishi each have 4mtpa of contractual long-term offtake from Cameron.

However, sources said the current length in the Atlantic market and the shoulder-season demand for October deliveries have helped absorb any impact from the outage at Cameron.

The ICIS US Gulf Free-on-Board (FOB) assessment rose from $3.30/MMBtu on 28 August to $3.75/MMBtu by 16 September, but this was linked to higher prices in the Dutch TTF and East Asia Index (EAX), where the latter rolled to November and December delivery this week, and not to supply tightness.

Some sources questioned whether partially-laden vessels could be allowed through the Calcasieu waterway with a shallower draft given the restrictions.

But other market sources said partial loadings seemed unlikely, given the inefficiencies of loading partial cargoes, particularly for a plant that would be just restarting.

There would also be logistical challenges presented to offtakers responsible for marketing and delivering partial volumes to their own end customers.

HURRICANE OUTLOOK

US Gulf LNG export infrastructure avoided any impact from this week’s Hurricane Sally, another storm that formed in the Atlantic and turned more towards the southeastern United States rather than eastern Louisiana.

Sally made landfall on 16 September and has since been downgraded to a tropical depression, bringing excessive rainfall to the region.

A historic number of named hurricanes formed in the Atlantic in August.

The hurricane season officially extends until the end of November.

While storm activity has shut in some offshore gas production in the Gulf of Mexico, the Henry Hub futures benchmark on the NYMEX has been so far cushioned from any storm-related impact from either hurricane Laura or Sally.

As onshore production makes up for a majority of Lower 48 production, high storage and dampened demand have more of an overall bearish impact on the futures price.