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    Freeport LNG Seeks Train 4 Extension


Covid-19, KBR exit from LNG business cited in extension request

by: Dale Lunan

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Freeport LNG Seeks Train 4 Extension

Freeport LNG has filed a request with the US Federal Energy Regulatory Commission (Ferc) seeking a three-year extension of the deadline to place into service the fourth train at its Quintana Island terminal in Texas, the commission said August 3.

The commission approved Train 4 in May 2019, with a condition that it be placed in service by May 17, 2023. Freeport is seeking an extension of that in-service deadline to May 17, 2026.

Construction of Train 4 – with a minimum 42-month construction period – hasn’t yet started, Freeport said in its request, and it’s now not possible to meet the original deadline.

“The inability to meet this schedule, along with other factors, is impeding [Freeport’s] efforts to progress commercialisation of the Train 4 project,” it said. “Additionally, the current world-wide economic climate and depressed global LNG prices resulting from the coronavirus pandemic make it challenging to complete long-term contracts with potential customers, resulting in associated delays for LNG projects in the United States and around the world.”

In May, Freeport selected KBR as the preferred bidder for the project’s engineering, procurement, construction and commissioning (EPCC) contract. But KBR’s subsequent decision to exit the LNG space, Freeport said, means it must now rebid the contract prior to making a final investment decision and starting construction, “which adds additional uncertainty as to the ultimate construction schedule.”

Freeport placed the first 5mn mt/yr train at Quintana Island into service in December 2019, while trains 2 and 3 followed in January and May, respectively.

In September 2019, Freeport announced that it had secured a mezzanine loan of up to $1.025bn from Westburne Capital – sufficient to provide 100% of the capital required for the 5mn mt/yr Train 4. At that time, Freeport said it hoped to make a final investment decision on the project “in the next several months.”