LNG

US energy company Sempra, operator of the Cameron LNG export plant in Louisiana, has signed an amended engineering, procurement and construction (EPC) contract with engineering firm Bechtel Energy for the Port Arthur LNG export project in Texas.

Bechtel and the Sempra unit, Sempra Infrastructure, have amended the EPC contract for the proposed Phase 1 liquefaction project in Jefferson County in Texas to a new price of approximately $10.5 billion.

“The execution of the final contract is a critical step in advancing Phase 1 of Port Arthur LNG toward a final investment decision,” said Justin Bird, Chief Executive of the Sempra Infrastructure unit.

“Based on robust customer interest, we know that Port Arthur LNG is highly attractive to the global market and we look forward to providing customers with access to secure, abundant and reliable US LNG,” added Bird.

Paul Marsden, President of Bechtel, said the firm was delighted to continue its partnership with Sempra after constructing the Cameron export plant at Hackberry.

“Alongside Sempra Infrastructure, Bechtel is ready to continue active construction in the Gulf Coast and bring more opportunities to the local region” added Marsden.

Contract scope

The Sempra EPC contract with Bechtel covers engineering, procurement, construction, commissioning, start-up, performance testing and operator training activities for Phase 1 of the new Texas plant.

The Port Arthur Phase 1 project has all its permits and is expected to include an initial two liquefaction Trains with a combined 13.5 million tonnes per annum of output.

Sempra said it was already working on a similarly-sized Port Arthur LNG Phase 2 project with “active marketing” taking place. This would take total production eventually to 27 MTPA.

California-based Sempra has signed a series of supply deals for Port Arthur Phase 1 involving four companies.

They are the Polish Oil & Gas Company, the German utility RWE Supply & Trading, UK chemicals company INEOS and US major ConocoPhillips.

The Sempra Infrastructure unit of Sempra also contains the other LNG assets like the Cameron plant and the Costa Azul export project in Mexico.

Earlier in 2022 Sempra agreed to sell a 10 percent interest in Sempra Infrastructure Partners to a subsidiary of the Abu Dhabi Investment Authority (ADIA), the wealth fund in the United Arab Emirates, for $1.78Bln in cash.

The San Diego-based utility business of Sempra includes San Diego Gas & Electric Co. and Southern California Gas Co. 

Ineos Group, the UK multinational chemicals company with ethane trading links to the US Gulf Coast, has signed an accord with Sempra Infrastructure to secure future cargoes from the planned Port Arthur LNG export project in Texas or the expansion of the existing Cameron LNG plant at Hackberry in Louisiana.

Sempra, the energy company with LNG assets and projects in Louisiana and Mexico as well as power and gas businesses in California and Texas, reported a jump in first-quarter revenue to $3.82 billion from $3.25Bln, though net profits fell because of one-time items and amid continued investment.

The amount of feed-gas flowing to US liquefied natural gas export plants is expected to decline over the next two months as scheduled maintenance programmes begin at export facilities in Louisiana and Texas.

US LNG exports are back on track after Sempra Energy shipped its first cargo from the Cameron liquefaction and export plant at Hackberry in Louisiana following a shutdown due to a power outage and other damage from a Gulf Coast hurricane at the end of August.

Sempra Energy’s Mexican subsidiary IEnova said objections had been formally lodged against its Pacific Coast Costa Azul liquefied natural gas export plant in the nearby city of Ensenada.

Sempra plans to have two more North American export plants in addition to its existing Cameron LNG facility at Hackberry in Louisiana and these include a Texas project at Port Arthur and at Costa Azul in the Mexican state of Baja California.

Now IEnova has just announced that objections have been raised before the Office of Urban Management, Ecology and Environment of Ensenada’s city council.

IEnova said in a statement that the objections are against certain municipal permits granted in favor of the Costa Azul liquefaction project that is being developed on land adjacent to the existing LNG import terminal.

“IEnova considers that these claims are unfounded and inadmissible and will enforce their rights in the corresponding procedure, seeking to dismiss the claims of the plaintiffs,” said the company.

The objectors are two real estate companies named by IEnova as Inmuebles y Fraccionamientos Peninsulares SA and Inmobiliaria Aquino SA.

The Sempra subsidiary, whose official name is Infraestructura Energetica Nova SA , is overseeing the whole LNG project in addition to its growing Mexican business in the natural gas pipeline and energy and power sectors.

Under Sempra’s plan for the Costa Azul export plant, the facility will be constructed in two phases. 

The first part of the transformation of the plant will see the building of a single liquefaction Train to be located adjacent to the existing terminal and with capacity for 2.4 MTPA of exports.

The Mexican project has already signed three accords with French major Total and Japanese companies Mitsui & Co. and Tokyo Gas for the full export capacity of Phase 1 development at Costa Azul.

The Costa Azul venture has additionally received US authorizations for natural gas to be exported to Mexico and re-exported to Non-Free Trade Agreement countries. 

Costa Azul was the first LNG import terminal on North America's West Coast and was built in 2008. It is located 15 miles north of Ensenada and with bi-directional pipeline connections to the US.

The Costa Azul facility previously benefited from south-to-north flows on the North Baja pipeline. However, north-to-south flows on the West Coast now predominate.

Sempra’s IEnova unit continues to be a main natural gas pipeline developer in Mexico.

Among its assets are its stake in the South Texas-Tuxpan pipeline bringing US natural gas to the southern Gulf Coast side of the country.

This pipeline is seen as fundamental to maintaining a reliable gas service in the southeast of Mexico with 2.6 billion cubic feet per day of capacity.

The pipeline crosses part of the Gulf of Mexico from Texas and was built at a cost of $2.5 billion. It is owned by IEnova and Canadian pipeline company TC Energy.

The South Texas-Tuxpan pipeline is inter-connected to the Valley Crossing Pipeline in Texas completed by Enbridge Inc., another Canadian company like TC Energy and based in Calgary.

The 168-mile Valley Crossing pipeline runs from the Agua Dulce hub in Texas to the Gulf of Mexico east of the port of Brownsville. 

Sempra Energy said the third liquefaction Train at the Cameron LNG export plant at Hackberry in Louisiana has begun production.

Commercial operations for Train 3 under Cameron LNG's tolling agreements now remain on track to begin in the third quarter of 2020.

Cameron LNG achieved commercial operations of Train 1 and Train 2 in August 2019 and February 2020 respectively.

Sempra Energy noted that its mission was still to be the premier North American LNG infrastructure company by providing natural gas producers with access to global markets.

Sempra LNG owns a 50.2 percent interest in Cameron LNG, now ramping up to production of 12 million tonnes per annum, or 1.7 billion cubic feet per day of natural gas.

Three other projects are planned, the expansion of Cameron LNG, the construction of the Port Arthur LNG plant in Texas and the Costa Azul facility on the Pacific Coast of Mexico.

“Congratulations to the entire Cameron LNG team for reaching this last major milestone toward full commercial operations for Phase 1 of this critical energy infrastructure facility,” said Justin Bird, Chief Executive of Sempra LNG.

“We look forward to the completion of this world-class LNG facility that will be an outlet for exporting abundant US natural gas to world markets,” added Bird.

“Sempra LNG is proud of the thousands of engineering and construction jobs and millions of tax revenues the project has provided to Southwest Louisiana,” he stated.

“As the construction phase of the project concludes with a remarkable record of over 88 million hours without a lost time incident, we are confident in Cameron LNG's commitment to operating safely and continuing to support the local economy and community that has welcomed us since day one,” he said.

Cameron LNG is jointly owned by affiliates of Sempra LNG, French major Total, Japanese trading house Mitsui & Co. and Japan LNG Investment, a joint venture involving Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha (NYK Line).

Japanese LNG engineering firm Chiyoda Corp. is part of the construction joint along with McDermott International of the US.

“I applaud the hard work and commitment of the entire joint venture project team whose focus on safety and delivery during this dynamic time brought Train 3 to the state of producing LNG,” said Mark Coscio, McDermott's Senior Vice President for North, Central and South America.

“The teamwork and diligence they have placed on safety and health as we navigate through the current Covid-19 pandemic has enabled us to continue our operations and deliver the project,” added Coscio.

McDermott and Chiyoda have provided the engineering, procurement and construction for the Cameron LNG project since the project's initial award in 2014.

US engineering company McDermott and Japanese firm Chiyoda said they continued to make strides towards substantial completion of Train 2 at the Cameron LNG plant in Hackberry in Louisiana.

Sempra Energy has given a strategy report on its LNG export plans and talks with Asian buyers on project offtake after its third-quarter earnings report, while also covering California natural gas regulations and investments and its valuable Oncor utility business in Texas.

The 177,000 cubic metres capacity carrier “Marvel Crane” is scheduled to arrive on June 18 at the Dunkirk LNG import terminal on the Channel Coast of France carrying the first shipment from the US Cameron export plant at Hackberry in Louisiana.

The Dunkirk LNG terminal opened in 2016 and is now owned and operated by a consortium comprising Fluxys of Belgium, operator of the Belgian Zeebrugge import terminal and insurance and banking groups from France and South Korea.

French energy major Total, a shareholder in the Cameron plant, was one of the original shareholders in Dunkirk LNG with France’s main utility Engie, though both sold their stakes in 2018.

However, Total is still a supporter of the Dunkirk facility, which also receives Russian volumes from the Yamal plant in northern Siberia, where Total is also a stakeholder.

Cameron LNG is located on the Calcasieu Ship Channel and is majority-owned by Sempra Energy, the California-based utility. The other shareholders apart from Total are Japan’s Mitsui & Co. and Japan LNG Investment, a company jointly owned by Mitsubishi Corp. and shipping company NYK Line.

The carrier “Marvel Crane” lifted the US cargo on May 31 and gave its destination as Dunkirk on June 10 in the latest shipping data received. The ship is owned by two other Cameron stakeholders, NYK Line and Mitsui.

The first phase of the Cameron project includes building the first three liquefaction Trains that will enable the export of around 12 million tonnes per annum of LNG, or about 1.7 billion cubic feet per day of natural gas.

The first Cameron cargo was loaded following a visit to the facility by US President Donald Trump.

Trump said in a speech that LNG exports have been a great jobs creator in the US and would generate billions in export revenues.

The facility is one of three LNG export plants Sempra is developing in the region, along with the Port Arthur project in Texas and the Costa Azul plant on the Pacific Coast of Mexico.

Sempra is expected to take Total on as an investor in its other export projects in Texas and Mexico at the same time as the French company is backing another LNG plant in Russia, the Novatek-led Arctic LNG II project.

The Cameron plant is the fourth US LNG export plant to begin commercial operations after Cheniere Energy’s Sabine Pass plant in Louisiana, its Corpus Christi facility in Texas and Dominion Energy’s Cove Point plant in Maryland.