LNG Academy Episode 1: Freeport LNG

Alex Taimuri

All right. Welcome, ladies and gentlemen, to our first episode of the LNG Academy. So to give you a little bit of background, the LNG Academy is a virtual podcast series with the vision to simply spread the education and knowledge of the LNG industry. There’s a lot to be spoken about in the LNG industry from a commercial point of view, but we’d like to do a deeper dive into the technical elements of LNG. We believe that this is something that not only we could benefit from, but the industry as a whole. So we’re very excited to launch today our very first episode. Our first episode today, of course, Freeport LNG, the incident that happened this year. So we’re going to be doing a deeper dive into this incident, and I’m sure it’s on top of mind of a lot of people right now and we’re going to do our best to unpack it from a very technical lens, a very factual, fact-based lens. What is the summary right now of the reports of the that have been released?


Mehdy Touil

Thank you, Alex. So before we start, we’d like to, I would like to mention four very important documents here. The PHMSA notice for proposed safety order issued on June 30th. The RCFA summary released by Freeport LNG on November 15th. On the same day a heavily redacted copy of the RCF report that was published by PHMSA. And most recently, the engineering information request sent on December 12th that followed the FERC site visit on November 30th. We will try to avoid the market rumors and speculative tweets that have been mostly covering the commercial side of the story.  


Alex Taimuri

What really happened at Freeport LNG in your opinion?


Mehdy Touil

Yes, so, let’s go through the sequence of events. So on the morning of June 8th, 2022, at approximately 1128, an incident occurred at the Freeport Liquefaction Plant that resulted into the release of LNG leading to the formation and ignition of a vapor cloud and subsequent fire at the facility. Fortunately, there was no injuries reported and the fire was extinguished after 40 minutes. There was no physical impacts on the liquefaction train, the storage tanks, or the loading facilities. At that time, Freeport said that it was targeting a partial resumption of the operation within 90 days. On the aftermath of the incident, Freeport issued a force measure to buyers for the rest of the month of June, which was retracted by the company later on August 10th. On June 30th, PHMSA, the Pipeline and Hazardous Material Safety Administration, which belongs to the US Department of Transportation, issued a notice for the proposed safety order requesting Freeport to complete and submit a third-party root-cause failure analysis within 60 days. On August 23rd, Freeport provided an update for the timeline of the restart, expecting a return to 85% of capacity by the end of November and 100% by March next year.  

At the end of October, FERC, which is the Federal Energy Regulatory Commission, and PHMSA, again asked the Freeport to provide additional information, including the status and the schedule of implementing the findings and recommendations, and the lessons learned from the investigation report and the assessment. 

The next day, Japanese giant JERA booked a loss of more than 750 million dollars US related to Freeport LNG sales from October 30th to March. JERA, which is also the largest buyer of LNG in Japan, completed the acquisition of 25.7% stake in Freeport LNG in January 2022. After that, on November 15th, a summary of the third party RCFA was posted by Freeport. A few hours later, the PHMSA posted a copy of the analysis produced by the IFO Group, which is an independent investigation firm. This copy was heavily redacted at the request of Freeport energy. Again, on November 18th, the company provided an update saying that the reconstruction activities at the plant were now to be completed only by the end of November, and the initial production resuming by mid-December, one train at a time. Two weeks ago, again Japanese JERA confirmed it was expecting a full resumption of shipment by March next year.  

On December 1st, Freeport said the restart was delayed again to the end of the year pending regulatory approval. On December 8th, Freeport filed the request with FERC to start loading propane refrigerant to Train 3 liquefaction unit, indicating that the restart was imminent for at least one train. And the very last update, on December 12th, FERC sent an engineering information request to Freeport regarding 64 pending items following a site visit that was performed on November 30th.  


Alex Taimuri

From your analysis, what is the direct cause of the incident?  


Mehdy Touil

So from the reports on June 3rd, the panel operator isolated the emergency shutdown valves, ESV valves on the 24-inch vacuum insulated pipe, which is a transfer line starting from storage tank #3. Over 5 days, the trapped LNG temperature kept steadily increasing through heat exchange with the surrounding. On June 6th, a field operator reported that the piping near the storage tank had visibly moved, and had fallen off its support. That section of pipe was inspected the next day by a junior engineer who determined that the movement of the pipe was the result of the missing support. On June 8th at 4:43 AM, the temperature started to cool down for a brief period indicated that LNG had broken out from the core inner pipe to the annular space. At 8:25 AM the temperature rose again to -107°F, which corresponds to a calculated pressure of more than 700 PSI, or 49 bars. At 11:28 AM the outer pipe failed, resulting in the loss of primary containment leading to the mechanical explosion, or the boiling liquid expanding vapor explosion, or BLEVE, and the release of around 5 metric tons of flammable vapor from several rupture points. Nine seconds after, the vapor cloud ignited, creating a huge fireball that was recorded on the CCTV.  

 
Alex Taimuri

What about the series of events that led to the incident that led to this… fireball?


Mehdy Touil

Obviously, the root cause was a trapping cryogenic liquid inside the pipeline. The explanation of why the panel operator decided to close the downstream and upstream emergency shutdown valve of that particular line is redacted in the RFA.  

Moreover, the pressure safety valve for that pipe was state tested on April 26th, but not put back online by the field operator who is the only authorized person to manipulate process valves, and not the contractors in charge of the PPSV testing. The line was then left without other pressure protection for several weeks, leading to the incident. There is normally a minimum of two safety valves. one online and the second on standby with the upstream block file closed and car-sealed, but in the this particular case there was only one PSV.


Alex Taimuri

All right. From your experience Mehdy, do you think this could have been prevented?  

 
Mehdy Touil

I would say that I have read all the reports in full, and I have to say that the IFO Group provided an excellent investigation report without overlooking the human factor. There are particular points that I would like to mention based on my own experience. First, from the control room perspective, the RCFA mentioned the temperature indicator used to monitor that line have no audible or visible alarms that could have alerted the panel operator about the heat rise in the line. Also, it was noted that the DCS display is monochrome, meaning it is difficult for the panel operator to differentiate between a closed and opened valve. The panel operators also complained about an unusual, excessive amount of alarms, even for out of service equipment, which is abnormal.  

From the field perspective, the absence of PSV checklist, car-seal audits, and procedures are clear shortcomings from the management, I think.

Alex Taimuri

What were the contributing causes, Mehdy?

Alex Taimuri

Mehdy Touil

Hmm. We have seen, sincerely, we have seen the company making significant changes to the way it operates the facility, and including changes, changes to procedures, hiring additional operators, as well as focusing on improving its training program, and with the creation of new functional departments. Freeport is also reviewing its plant operating scenarios and has launched the revision of its safety process approach. The 64 pending points that were mentioned in the engineering information request sent by FERC cover mostly procedures. So I think that we can expect the Trian 3 to restart very soon. The company suffered a huge blow to its reputation, and after more than six months of outage, like I said, the company and the shareholders lost more than 120 cargoes of LNG at a time when prices have reached record high. So I’m sure the management will do its best to restore Freeport energy credibility. This is also a valuable lesson for the global LNG industry and the community. Safety does not happen by accident.

And on that note, right now several LNG facilities across the globe are reviewing their car seal and PPSV audit procedures. But what about training? What about mentorship programs to ensure that skills and expertise are flawlessly transferred to new operators? What about competency management when everyone is talking about leadership? We are answering what is probably, I think, the last phase of growth for the energy industry. It is time to embrace our core values and continue preserving the energy industry’s excellent safety record.

 
Alex Taimuri

Well said, Mehdy, well said. And that’s really the vision and value of this series, is to spread that knowledge, to ensure the integrity of this industry, this great industry that has a very good safety record and hoping that we could prevent some of these accidents from occurring again through some of these lessons, and hoping that those lessons be spread, discussed, and talked about. So, I thank you very much Mehdy for this. This has been very valuable. I hope the audience found this a very valuable podcast. That’s all the time we have today, but we look forward to the next episode and we hope that everyone has happy holidays and a happy New Year and a very prosperous 2023. Thank you.


Mehdy Touil

You’re welcome.