Cheniere Energy is nudging federal regulators to allow the company to put back online one of two storage tanks that had leaked last year at its Cameron Parish LNG export terminal.

The request comes nearly five months after two federal agencies warned Cheniere Energy against using the liquefied natural gas storage structures without their written approval.

Rather than bring both tanks back online at the same time, the company wants to prioritize one tank over the other in its efforts to meet federal requirements imposed in early July by the Pipeline and Hazardous Materials Safety Administration and the Federal Energy Regulatory Commission.

Each LNG storage structure at Sabine Pass — initially pitched as a three LNG tank import facility approved by FERC in 2004 and later converted for exports with five structures in all — can hold up to 3.4 billion cubic feet of natural gas. Cheniere has been steadily increasing the volume of LNG it has exported from Sabine Pass since it began in 2016. Meanwhile, competitors have begun to get operations online this year as the LNG construction boom in Louisiana continues.

At Sabine Pass, 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 a 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. 

That second structure is the one the company wants to bring back into operation on a faster track.

A joint letter sent on July 9 by the two federal agencies claimed they found Cheniere was making repairs to two tanks without approval and that neither agency was willing to approve the structures as safe until the company followed its rules and obtained written approval.

Cheniere said it's been working on the requirements imposed by regulators and wants a "deviation to the existing structure of the joint letter to modify the approval process … while continuing to work to complete the remaining joint letter requirements applicable to the other Sabine Pass LNG tanks."

Regulators 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.

Much of the tank-specific documentation Cheniere has filed with regulators since the leaks and joint letter has been marked confidential. An open records request for more specific information regarding the status of the tanks and current condition was largely denied. Cheniere objected to the release of 23 documents, arguing that the information should be considered privileged.

The company says it's committed to fulfilling all of the requirements for both tanks and that the inability to use the tanks has not impacted operations in a material way. 

"We have effectively managed operations at (Sabine Pass) with (only) three tanks for more than a year, and we continue to be able to do so," said Eben Burnham-Snyder, spokesperson for Cheniere Energy. "This request reflects the progress we have made on the requirements to bring Tanks 1 and 3 into service, especially on Tank 1."

FERC declined comment and PHMSA did not respond to comment.

Cheniere Energy told investors in November that during the third quarter its operating costs had increased, mostly related to the addition of LNG units in operation but also "certain maintenance and related activities at the (Sabine Pass) project."

The company said that it had a "successful maintenance turnaround at Sabine Pass" this year. Also, construction of it's sixth liquefaction unit at Sabine Pass was about 38% complete as of September, with projections of being substantially completed by 2023.

Cheniere Energy reported a net loss of $318 million during the third quarter related to higher operating expenses, depreciation of assets and interest payments. Revenue totaled $2.2 billion. By comparison, Cheniere generated $65 million in profit and $1.8 billion in revenue during third-quarter last year. 

This year's losses included an impairment of $80 million related to Midship Pipeline, which was supposed to run from Oklahoma to the Gulf Coast. It had cost overruns and construction timelines were extended after FERC issued a stop-work order several months ago related to environmental compliance. 

The Sabine Pass facility is still the largest single exporter of LNG in the U.S., with about 3 billion cubic feet per day exported as of June, according to the U.S. Energy Information Administration.

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