Bechtel Energy received a notice to proceed for the engineering, procurement and construction of Sempra Infrastructure’s estimated $13-billion LNG export terminal in Port Arthur, Texas, the developer said March 20 after making a final investment decision for it to come online in 2027 and 2028.
The two-train project could create 5,000 construction jobs, Bechtel Chairman and CEO Brendan Bechtel said. “Bechtel has a record of delivering LNG infrastructure on the U.S. Gulf Coast and bringing quality jobs and training opportunities to local communities,” he said.
Sempra made the final decision after closing a joint venture agreement with ConocoPhillips and agreeing to sell an indirect, non-controlling interest in the project to an infrastructure fund managed by KKR.
The Port Arthur project is fully permitted and will also include two liquified natural gas storage tanks with a capacity to produce 13 million tons per year of LNG for shipment.
Sempra has said a key part of its strategy was not committing to the pricing of offtake before a revise of its fixed-price EPC contract with Bechtel, announced in October 2022. The amended contract included a price of about $10.5 billion for building the first phase of Port Arthur, up from about $8.9 billion in 2020. A similarly sized Port Arthur Phase 2 project is under development, the company said, but the project has had legal battles with activists over air pollution impacts.
Sempra said KKR would acquire a 25% to 49% indirect, non-controlling interest in the project, subject to approvals, and will provide construction management, oversight and governance.
Louisiana Project Commits to Expand
The Port Arthur LNG project action follows a final investment decision a week earlier by developer Venture Global LNG to build the second phase of its Plaquemines LNG project along the Gulf Coast in Plaquemines Parish, La.
The commitment follows its announcement that it secured $7.8 billion of financing. The firm sanctioned construction last May of the project's first phase, when it secured $13.2 billion in financing for the terminal and pipelines, although work started in 2021.
The two phases would produce about 20 million tons per year of LNG, with the first set to start producing in 2024, and the second in 2025.
Roof-raising was completed ahead of schedule in January for the first of four storage tanks being built by contractor McDermott at the Plaquemines site
Venture Global said it issued full notice to a joint venture of Zachry Group and KBR Inc. to continue construction of phase 2.
Project opponents, including The Deep South Center for Environmental Justice, Healthy Gulf and Sierra Club, filed suit last November against the project, claiming it should not have been approved because it lacked a coastal use permit to operate and posed a flood risk. The suit was dismissed in mid-March by a Louisiana state court judge.
Environmental groups had opposed the expansion, citing concerns about the project’s potential impact on air and water quality and climate change, among other issues
However, one other announced project faces a delay. Developer NextDecade said it will not make a final investment decision on its Rio Grande LNG project near Brownsville, Texas until the end of the second quarter instead of its previous estimate of March 31, according to a filing to the U.S. Securities & Exchange Commission.
The firm said it had extended the price validity of its construction agreements with Bechtel Energy through June 15. The project also has faced strong opposition related to environmental impacts to nearby communities, but NextDecade said it plans to capture and store more than 90% of plant carbon dioxide emissions, estimated at more than 5 million tons per year.
There are multiple LNG projects in development along the Gulf Coast, with five currently under construction, 11 approved but not under construction and five more proposed to the Federal Energy Regulatory Commission.
But the U.S. boom prompted by global market shifts since the Ukraine invasion may be nearing its limit, say some market observers.
“We see a scenario on the horizon where natural gas prices and the need for LNG export terminals could decrease,” the Institute for Energy Economics and Financial analysis told FERC in February.
Canada Projects on the Move
New LNG export projects in western Canada, seen as links to Asian markets, also gained needed approvals this month. The estimated $7.3 billion Ksi Lisims LNG project to be built in British Columbia was allowed by provincial regulators to begin the environmental review process, which could take up to 18 months. The floating facility would have capacity of about 12 million tons per year.
The decision follows the B.C. government's final approval March 14 of the $2.4 billion Cedar LNG terminal, also a floating LNG facility in Kitimat, B.C., and an 8-km pipeline to connect to the Coastal Gas Link already under construction. The facility will have capacity to export 3 million tons per year to Asia.
Both projects have native First Nations as project owners, with Canadian and U.S. gas producing companies as partners.
Both also have committed to meet tougher new provincial emissions reduction goals by 2030, including achieving net-zero emissions, in part by using abundant local hydroelectric power instead of gas for operations. The province aims to reduce emissions 40% below 2005 levels by 2030.
Provincial Environment Minister George Heyman said the Cedar LNG project "has 16 legally binding conditions, including a requirement to develop a GHG (greenhouse gas) reduction plan." It also gained federal approval, with additional legally binding conditions. The federal government also has set a goal to reduce carbon emissions 40 to 45% by 2030.
"We are demonstrating how we can responsibly advance LNG development in our province while protecting the environment," said Crystal Smith, chief councillor of project owner the Haisla nation.
However, that activity depends on the progress of anticipated new transmission infrastructure, estimated at 95 km, which is needed to link the power source to the coastal facilities in northwest B.C., with a tough permitting process foreseen.
The Ksi Lisims LNG project would need about 100 km of transmission. “A key construction requirement is for B.C. Hydro to be in a position to deliver grid-supplied power to the point of interconnection and to have sufficient power supply available for the project by the time we are ready to commence operations,” Eva Clayton, president of project owner Nisga’a nation, told regulators.
Tristan Goodman, CEO of the Explorers and Producers Association of Canada, said the B.C. emissions reduction plan is generally "constructive and positive," but the industry questions how the cap would be implemented, according to a Reuters report. "The concern lies in the details."
About 18 LNG export facilities have been proposed in Canada, mostly in British Columbia, said Natural Gas Intelligence. Only one is under construction, the $14-billion first phase of the LNG Canada project led by Shell plc, with work managed by the Fluor-JGC joint venture and about two-thirds complete. The owners have yet to say if and when a second-phase would be sanctioned.
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