Freeport seeks more time to build fourth LNG train, looks for new EPC contractor

Freeport LNG has requested more time from US FERC to build the fourth liquefaction train at its export plant in Texas.

The terminal owner led by billionaire Michael Smith launched commercial operations in May 2020 for the third liquefaction train at its facility.

This event also marked the full commercial operation of Freeport LNG’s $13.5 billion, three-train facility. It has a capacity of more than 15 mtpa.

Freeport LNG is also planning to add another production unit with a capacity of five mtpa but it has not yet taken a final investment decision.

Now it is seeking for more time to build the project.

FERC approved the fourth train in May 2019 and after that granted an extension to Freeport LNG in September 2020 to build and commission the project until May 17, 2026.

However, construction of the new train has not yet commenced, due in “large part to delays stemming from the Covid-19 pandemic,” Freeport LNG told FERC in a filing dated May 16.

Talks with “several potential customers”

Freeport LNG said that the “impact of the pandemic on the global community has now waned substantially, and global demand for US LNG has rebounded and is projected to remain strong.”

The firm is actively marketing Train 4 project capacity to a “number of potential off-takers, particularly in European markets, and is in active negotiations with several potential customers,” it said.

In addition, Freeport LNG is also participating in President Biden’s recently announced US-European Commission task force to assist in getting LNG supplies into Europe.

“The US has made a significant commitment to supply LNG to Europe to help global allies lessen their reliance on Russian energy sources, and FLNG anticipates being able to help address some of that need,” it said.

Given the anticipated minimum 48-56 month period required to construct the fourth train, the terminal operator said “it is not possible for FLNG to meet the current May 17, 2026 in-service date deadline.”

“FLNG hereby requests that the Commission grant an approximately 26-month extension of time so that FLNG may construct and place the Train 4 Project in service by no later than August 1, 2028,” it said.

Searching for new EPC contractor

To date, Freeport LNG said it has attempted in “good faith” to meet the in-service deadline, obtaining and maintaining all required permits and investing about $100 million in capital to progress the development.

Moreover, the terminal operator had originally selected KBR as the preferred bidder for the engineering, procurement, and construction (EPC) contract for the development.

However, due to KBR’s decision to exit the LNG EPC business, Freeport LNG had to conduct another lengthy bidding process for the EPC contract prior to commencing construction of the new train.

Freeport LNG said it has launched this competitive bidding process in early May 2022 with “several world-class engineering and construction companies” in order to receive firm price and schedule proposals for the Train 4 project in early fourth quarter.

The terminal operator said it expects making a final award for the project shortly thereafter.

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