Two federal agencies have warned Cheniere Energy against using liquefied natural gas storage structures that leaked last year at its Cameron Parish LNG export terminal until Cheniere meets certain safety requirements.
The warning was issued in a July 9 letter after the agencies said they found out Cheniere was making repairs without approval. The letter says that neither agency is willing to approve the structures as safe until Cheniere Energy follows its rules and told the company it needs written approval before using the Sabine Pass storage structures again.
The joint letter was from the Pipeline and Hazardous Materials Safety Administration, operated within the U.S. Department of Transportation, and the Federal Energy Regulatory Commission.
Each storage structure has two tanks — a tank within a tank. In January 2018, workers discovered that super cold natural gas from an inner layer escaped to the outer layer, causing cracks that were visible on the outside of the tank structure. More natural gas leaked from a second storage structure after it was opened because the leak was discovered in the inner layer, but it had not caused visible damage to the outer layer. The company reported no injuries, fires or explosions as a result of the tank leaks. The structures can hold up to 3.4 billion cubic feet of natural gas each.
In 2018, about 500 employees were employed at the site; the nearest town is Johnson Bayou, about 12 miles away.
The Pipeline Hazardous Materials Safety Administration ordered Cheniere Energy to fix the leak in February 2018, outlining its requirements.
At the time, the agency also was concerned that the reason the two tanks within the storage structures leaked may be cause for concern for three other LNG storage structures on the site.
Cheniere Energy's attorneys pushed back against the federal agency's requirements, suggesting that its demands were too cumbersome to implement. Federal regulators settled with Cheniere out of court in a consent agreement that outlined what the company must do to fix the issue before filling the tank structure again with natural gas.
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Cheniere asserts that it has since discovered the cause of the leak and “disabled the mechanism in all the tanks.” A statement from Cheniere also said there isn’t any immediate health or safety hazard, nor does the situation impact company operations.
“We will continue to work with our regulators to safely bring these tanks back to service, after receiving authorization from PHMSA and FERC,” Cheniere Energy's statement said. “We are analyzing the letter from the agencies and will provide a formal response. We have been responsive and forthcoming throughout this process and will continue to be.”
However, regulators said in the July 9 letter that Cheniere has “failed to comply with prior requests.” Requirements were outlined again in the agencies' letter.
For example, the company was supposed to test the shell and floor plates of one tank and send along documentation, but has not done so a year after the leak.
According to the letter, the regulators also required Cheniere to re-inspect all its LNG storage tanks for cracks or any potential for structural issues and submit photos. Any more cracks discovered would need to have a repair plan designed by a qualified licensed structural engineer. The company also was required to install gas detection devices for early alerts if methane is leaking around the storage tanks.
The Pipeline Hazardous Material Safety Administration told Cheniere in late May that it was concerned about the company fixing one of the storage tanks by filling it with perlite, a volcanic glass used as insulation, and called the repair premature in the July 9 letter.
The warning letter comes at a time when the company is pushing to grow its operation. Cheniere already has five LNG units inside its Sabine Pass terminal and initially planned for six as part of an overall $18 billion project. Cheniere made the final decision in June to move forward with the sixth unit, a $3 billion investment.
Cheniere Energy is investing $3 billion to expand its liquefied natural gas terminal with a sixth unit at Sabine Pass in Cameron Parish throug…
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