Natural gas plummets as Freeport delays facility restart following explosion

Smoke billows from the Freeport LNG plant in Quintana, Texas, U.S., June 8, 2022, in this still image obtained from a social media video on June 9, 2022. 

The price of natural gas plummeted on Tuesday after it was learned that the facility that had a fire last week won't be back up and running soon.

Repairs and a return to full plant operations are not expected until late 2022, according to the company. An explosion took place at the facility in Texas last week.

A restart of partial operations is expected to be achieved in 90 days.

The price of U.S. natural gas fell to $7.22 per MMBtu.

Rob Thummel, managing director at Tortoise Capital, said that the U.S. natural gas market would be temporarily oversupplied.

He said that the U.S. natural gas supply will likely remain at current levels.

In the U.S., Freeport's operation is a small part of the total capacity.

Natural gas prices are still high despite Tuesday's drop. Demand has rebounded as the world emerges from the Pandemic.

The market was already tight. Europe is moving away from Russian energy and record amounts of U.S.LNG are heading to the continent.

The economy is facing inflationary pressures. Drivers are already grappling with record prices at the pump with the national average for a gallon of gas topping $5 over the weekend and now utility bills are also set to increase.

In May, natural gas prices went above $9 per MMBtu for the first time in almost two years.

The company originally said the plant would be closed for several weeks.

Liquefaction trains, storage tanks, dock facilities, and LNG process areas were unaffected.