Natural gas prices plummeted Tuesday, as Freeport LNG announced that the fire at their overseas export facility was bad enough that the facility will not be exporting LNG anytime soon.

The company said Tuesday in a statement, ″[C]ompletion of all necessary repairs and a return to full plant operations is not expected until late 2022. Given the relatively contained area of the facility physically impacted by the incident, a resumption of partial operations is targeted to be achieved in approximately 90 days.”

The company explained, “The incident occurred in pipe racks that support the transfer of LNG from the facility’s LNG storage tank area to the terminal’s dock facilities. None of the liquefaction trains, LNG storage tanks, dock facilities, or LNG process areas were impacted.”

That means the facility cannot transfer LNG to boats, to ship it to Europe, where Russia’s refusal to sell natural gas to various European nations, in retaliation for sanctions levied over the Ukraine conflict, has created a shortage in various regions and driven prices sky-high.

Rob Thummel, managing director at Tortoise Capital said, “The U.S. natural gas market will now be temporarily oversupplied as 2 bcf/d or a little over 2% of demand for U.S. natural gas has been abruptly eliminated. U.S. natural gas supply will likely remain at current levels as producers won’t reduce production by 2 bcf/d. The result is an oversupplied U.S. natural gas market,”

US natural gas fell on the news to $7.22 per million British thermal units (MMBtu), a 16% drop.

US natural gas is still priced 93% higher than in January despite the drop, due to a post-Covid higher demand placed on a constrained supply.