February 12, 2018 / 6:10 PM / 2 months ago

UPDATE 1-Cheniere LNG output unaffected by shutdown of Louisiana storage tanks

(Adds background on storage tank problems, background on Cheniere)

LONDON/NEW YORK, Feb 12 (Reuters) - Cheniere Energy Inc said on Monday liquefied natural gas (LNG) production from its Sabine Pass export plant in Louisiana will not be affected following an order to shut two cracked storage tanks that leaked the super-cold fuel.

The U.S. Department of Pipeline and Hazardous Materials Safety Administration (PHMSA) on Feb. 8 ordered Cheniere to shut two LNG storage tanks after plant workers on Jan. 22 discovered a one-to-six foot long crack at one tank that leaked the fuel into an outer layer.

The order comes as Cheniere is preparing to expand another LNG export facility at Corpus Christi in Texas that is under construction after signing a multi-year deal to sell fuel to a company in China.

During the investigation of the Sabine site, PHMSA discovered a second tank had also experienced releases of LNG from the inner tank, raising the possibility that similar leaks may have occurred in multiple tanks, it said in its corrective action order report.

“Safety is Cheniere’s number one priority, and we want to stress that there was and is no immediate danger to our community, workforce, or our facility from this incident, nor is there any impact on LNG production,” a Cheniere spokesman said.

“Cheniere has initiated an event investigation and is currently working with experts on a repair plan,” he said.

The leak discovered on Jan. 22 was only the latest in a series of incidents that have occurred between 2008 and 2016 in tank 103, where the recent leak occurred, according to PHMSA.

There are five tanks at Sabine, each with the capacity to hold the equivalent of 3.4 billion cubic feet of gas or 17 bcf in total. One billion cubic feet of gas is enough to fuel about five million U.S. homes.

Cheniere’s Sabine Pass terminal in Louisiana is currently the only big LNG export facility operating in the country. Several other companies are building other trains at six sites which is expected to make the United States into the third biggest LNG exporter by capacity in 2018.

Total U.S. export capacity is expected to rise to 4.6 bcfd by the end of 2018 and 9.4 bcfd by the end of 2019 from 3.0 bcfd now.

Reporting by Oleg Vukmanovic in London and Scott DiSavino in New York, editing by Adrian Croft and Tom Brown

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