Sept. 04–Sempra Energy’s race to grab a chunk of the global liquefied natural gas export market took another step forward as the San Diego-based Fortune 500 company received an important regulatory notice from the federal government for a proposed facility on the Texas Gulf Coast.
The Federal Energy Regulatory Commission informed Sempra officials that a Notice of Schedule sets Jan. 31, 2019, as the planned completion date of the final environmental impact statement for the siting, construction and operation of the Port Arthur LNG project.
“This is an important step forward in the federal regulatory review to construct our Port Arthur liquefaction-export project,” Joseph Householder, Sempra’s president and chief operating officer said in a statement. “Federal and Texas state policymakers have been instrumental in supporting U.S. liquefied natural gas exports to bolster the U.S. economy.”
Sempra officials have not made a final decision to go ahead with the Port Arthur project, saying it is contingent on a number of permitting, engineering, financial and partnership issues.
Earlier this year, though, Sempra signed a 20-year contract with Poland’s state-owned gas company to deliver 2 million tons a year of LNG from Port Arthur, pending the project’s completion.
LNG processing units are called “trains” and Port Arthur would include two trains to enable the long-term sale of about 11 million tons per year of LNG. Three storage tanks and two marine berths are also part of the project.
“The market has fluctuated for LNG exports,” said Andy Smith, a senior analyst who follows utilities for Edward Jones. “The prices have come down but companies still appear to be proceeding, at least some of them, and the off-takers appear to still want the product. So while the prices may not be as attractive as they once were for these exporters, if they can get contracts in their hands and receive all the approvals and it makes economic sense for them to do it, they’ll go ahead and green-light them.”
If Sempra proceeds with the Port Arthur facility, it will mark the company’s second significant LNG project in the Gulf Coast.
Sempra has partnered with companies in Japan and France to construct the $10 billion Cameron LNG facility in Hackberry, Louisiana. It’s expected to begin operations next year with three trains and company officials are considering adding more in the future.
Sempra has high hopes for Cameron. Last year, Householder projected cash distributions after debt service to be over $11 billion during the project’s 20-year contract period.
The company is also considering adding an LNG export component to the facility its subsidiary in Mexico, IEnova, operates near Ensenada. An export facility in Baja, California, would be financially attractive because LNG shipments to markets in Japan and Asia would not have go through the Panama Canal.
The market for LNG — the process in which natural gas is cooled to minus-260 degrees Fahrenheit and condensed into liquid — has boomed in recent years as U.S. producers have tapped into ever increasing amounts of gas found in shale fields.
The first U.S. export facility opened in Louisiana in 2016, the second opened in Maryland earlier this year and Sempra is among a number of companies racing to get facilities up and running. Some analysts have predicted LNG growing 4 to 5 percent a year through 2040.
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