The US Energy Information Administration (EIA) expects US liquefied natural gas (LNG) exports to average 10.5 billion cubic feet per day during the second half of 2022—a 6% decrease from the first half of the year—according to the agency’s July 2022 Short-Term Energy Outlook (STEO). That amount is a 14% decrease in US LNG exports from EIA’s June forecast.

EIA revised its estimates based on an outage at the Freeport LNG facility, which is expected to last until late 2022. Freeport accounts for 17% of US LNG export capacity.

With less LNG being exported in the second half of the year, more natural gas is likely to stay in the domestic market. We expect lower US natural gas prices for the rest of 2022 than we had previously forecast, but lower prices in 2022 led us to reduce our expectations for natural gas production.

—EIA Administrator Joe DeCarolis

EIA forecasts the US Henry Hub spot price will average $5.97 per million British thermal units (MMBtu) during the second half of 2022, down 44% from the June forecast. For the last three quarters of 2023, EIA expects natural gas prices will average $4.36/MMBtu, up 14% from the June forecast. EIA also expects that more natural gas will be in storage heading into this winter than it had forecast in June.

Other key takeaways from the July 2022 STEO forecast include:

• EIA expects US refineries to run at an average of 94% of their capacity during the third quarter of 2022, a higher capacity factor than in previous years. At the same time, refinery capacity in the United States has decreased since 2019.

• EIA expects coal consumption to decrease by 3% in 2022 and by 4% in 2023, as 24 gigawatts of coal-fired power plants retire by the end of 2023.

• EIA expects renewable energy to provide 24% of US electricity generation in 2023, up from 20% in 2021. The growth in generation from renewables is primarily driven by solar power, with 71% more capacity by the end of 2023 than at the end of 2021. EIA expects solar generation by US power plants to grow by 27% in 2022 and by 26% in 2023.

Freeport outage. On 8 June, an incident occurred at the Freeport LNG liquefaction plant on Quintana Island, Texas that resulted in the release of LNG, leading to the formation and ignition of a natural gas vapor cloud, and subsequent fire at the facility. In accordance with Freeport LNG’s safety design parameters, the LNG vapor cloud dispersion and ignition thereof were at all times contained within the fence line of the liquefaction facility, lasting approximately 10 seconds.

The fire and associated smoke visible thereafter were from the burning of materials in and around the location where the incident occurred, such as piping insulation and cabling. With the assistance of local area emergency response personnel, the resultant fire was extinguished approximately 40 minutes after the initial incident.

While the burning of those materials resulted in carbon monoxide, nitrous oxide, particulate matter, sulfur dioxide and volatile organic compound emissions, these were of limited quantity due to the short duration of the fire and not at levels that posed any immediate risk to Freeport LNG personnel or the surrounding community. There was no release of any other chemicals or substances from the plant during the event, the company said. Water used to suppress the subsequent fire was captured on site, and will be tested and confirmed free of any harmful contaminants before being released or removed for proper disposal.

The incident occurred in pipe racks that support the transfer of LNG from the facility’s LNG storage tank area to the terminal’s dock facilities located on the intracoastal (i.e., north) side of Freeport LNG’s dock basin. None of the liquefaction trains, LNG storage tanks, dock facilities, or LNG process areas were impacted.

Preliminary observations suggest that the incident resulted from the overpressure and rupture of a segment of an LNG transfer line, leading to the rapid flashing of LNG and the release and ignition of the natural gas vapor cloud. Additional investigation is underway to determine the underlying precipitating events that enabled the overpressure conditions in the LNG piping.

Completion of all necessary repairs and a return to full plant operations is not expected until late 2022.