Though debt financing has become more costly, market observers believe the dam could break in 2023 and projects with 6.2 Bcf/d of additional capacity could reach financial close. First in line will likely be Sempra with its Port Arthur LNG greenfield project in Texas.
The marketing Phase 1 for the 13.5 mtpa Port Arthur LNG venture has been completed, Sempra said as the project is “now fully subscribed at 10.5 mtpa of definitive, long-term contracts with top-tier counterparties.” The US utility recently revised its EPC contract with Bechtel after securing an equity, offtake and gas supply deal with Conoco Philips, in addition to the 7.3 mtpa of firm offtake from Ineos and Engie combined.
In addition, Sempra's Cameron LNG Phase 2 project remains on track for completion of the FEED process this summer.
Another greenfield project, the 8.4 mtpa Commonwealth LNG project in Cameron, Louisiana, has all regulatory permits in place and Australia’s Woodside committed to 30 percent of the offtake. Financial close is expected in the first quarter of this year, and modular construction could allow it to be online within three years from FID, in the third quarter of 2026.
NextDecade is also likely to take FID in the first quarter on a three-train 16.2 mtpa portion of its overall 27 mtpa Rio Grande LNG project. Over half of the volume has been committed via long-term contracts. Similarly, Sempra is edging closer to sanction Cameron Phase 2. FEED works are well underway and an FID needs to follow this year if Sempra wants to bring the train into operation as planned in 2027.
A third front-runner, tipped for an early FID this year, is the second phase of Venture Global’s Plaquemines (6.7 mtpa) – while others still have to overcome marketing, financing or engineering hurdles. Despite developers’ ambitious plans, analysts doubt that all abovementioned ventures will go ahead in 2023.
Tapping US gas for less than $3/MMBtu
Natural gas finds in North America are estimated to total 2,750 trillion cubic feet (Tcf) of which around 1,700–2,000 Tcf could be produced at a cost between $3 and $4 per MMBtu. But this would require investment in new feeder pipelines and buyers committing to 20-year offtake deals, which European buyers are reluctant to do.
“Gas infrastructure development and long-term offtake agreements are fundamental, or there will be higher prices for gas and LNG, which may have spill-over effects for power, fertilizer, and other essential commodities,” said Dumitru Dediu, Partner at McKinsey. On the other hand, if strategic pipelines links get build to connect low-cost gas basins to high-demand areas and export terminals, this could bring gas prices from today’s high levels around $6 per MMBtu back to about $3 per MMBtu at Henry Hub, reducing inflation.
