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Cheniere ordered to take storage tanks offline after leak

Federal regulators have ordered Houston’s Cheniere Energy to take two of its Sabine Pass liquefied natural gas storage tanks offline after one of them leaked last month, the latest in a series of related problems that began a decade ago.

The U.S. Pipeline and Hazardous Materials Administration issued the order Thursday after workers at Cheniere’s Louisiana LNG processing and export facility discovered that one of five on-site storage tanks had leaked LNG into the containment area surrounding it. The natural gas, which liquefies at about minus 260 degrees Fahrenheit, had seeped between the inner and outer tank walls, eventually causing the outer wall to crack in four places under extreme temperature, according to the order.

A second tank also released natural gas into the space between its inner and outer walls. The outer wall remained intact, but natural gas vapors escaped from 14 places along the base.

Cheniere moved quickly to isolate and empty the cracked tank upon discovering the leak, according to the order. In a statement, Cheniere spokesman Eben Burnham-Snyder said the company is investigating the releases and working with experts on a repair plan.

“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,” he said.

The Pipeline and Hazardous Materials Administration obtained a copy of a prior investigative report that a Cheniere subsidiary received last March from Matrix Service, which built both of the affected tanks. The report noted that between 2008 and 2016, the cracked tank had experienced 11 other “upsets” that might have been caused by LNG splashing over the top of the inner tank. Cheniere indicated that similar problems might have occurred in the second tank.

In its order, the Pipeline and Hazardous Materials Administration said that Cheniere had not corrected the “long-standing safety concerns” described in the Matrix report and could not determine how much LNG had leaked between in inner and outer walls of the tanks. The agency, now investigating the cause of the incidents, has ordered Cheniere to take the affected tanks offline within a week, determine the cause of the problems and make necessary repairs.

As part of the order, Cheniere must inspect all five of its tanks, each of which hold 3.4 billion cubic feet of natural gas. The Pipeline and Hazardous Materials Administration has requested that the company provide it with a list of all spills or breaches associated with those systems.

The order comes as Cheniere prepares to ramp up its LNG export activity. The company on Friday announced two long-term deals to sell liquefied natural gas to China’s state-controlled oil and gas company through 2043.

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Cheniere is also working to open an LNG export terminal at the Port of Corpus Christi, which will support the deals with China. The company has begun construction on two liquefaction plants to convert the gas into liquid, and it is planning to build a third if it secures enough sale contracts.

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