Sempra Eyes FID On 13-MTPA, US$10.5 Billion Port Arthur LNG Project
Sempra Infrastructure, a subsidiary of Sempra, announced during its Q3 2022 earnings call and press release that it is now targeting a final investment decision (FID) for Phase 1 of its Port Arthur liquefied natural gas (LNG) project in Q1 2023. “This news follows the company’s recent announcement that it has finalized its fixed-price engineering, procurement, and construction [EPC] contract for Port Arthur LNG Phase 1 and the substantial completion of marketing for Phase 1, which was achieved during Q2 through a series of previously announced non-binding agreements with both domestic and international counterparties,” said Sempra in a statement. “A similarly sized Port Arthur LNG Phase 2 project is also under active marketing and development.”
The project is forecast to cost US$10.5 billion. When both phases are complete, it is expected to have a takeaway capacity of 13 MTPA from two LNG trains. Port Arthur LNG is expected to enter service in 2027.
Project Development
Phase 1 has received Federal Energy Regulatory Commission (FERC) and Department of Energy (DOE) export permits. It has also executed its final EPC contract with Bechtel. In addition to determining the FID, Sempra is working on converting its current heads of agreement (HOA) into sales and purchase agreements (SPAs). Sempra currently has HOAs with ConocoPhillips, RWE, PGNiG, and INEOS. Sempra reported that the total capacity of the HOAs is around 12 MTPA, but it is also having “significant ongoing discussions with potential customers for Port Arthur LNG.” Sempra has 100% of its required Phase 1 volumes under HOAs. Its goal, however, is to sign the entire Phase 1 capacity through long-term contracts with an average length of 20 years. The Wall Street Journal reported that Williams Companies may secure 3 MTPA of LNG out of Port Arthur LNG via a 20-year non-binding agreement. All told, Sempra’s existing HOAs and interest has extended past Phase 1 into Phase 2. Although Sempra said that many of the HOAs are in late-stage negotiations, it has not officially booked any 20-year contracts at press time of this article.
Sempra is hoping that the infrastructure projects provide a reliable stream of steady cash flows that eventually exceed the development costs and can support further growth, share buybacks, and dividend raises.
Takeaway Capacity And Compression Requirements
For Port Arthur LNG to secure reliable supply, it needs new pipelines and compressor stations. Port Arthur LNG’s affiliate, Port Arthur Pipeline, is proposing two new pipelines that would connect to more than 17 Bscf/d (481 × 106 m3/d) of natural gas from major supply basins. Both new pipelines have a capacity of 2 Bscf/d (56.6 × 106 m3/d).
The Texas Connector Pipeline would also involve the construction of two new compressor stations, known as the South Compressor Station and the North Compressor Station. Meanwhile, the much longer Louisiana Connector Pipeline would use the new Beauregard Parish Compressor Station.
| Name | Location | Capacity | Length | Pipe Diameter | Status |
| Texas Connector | Jefferson And Orange Counties, Texas, and Cameron Parish, Louisiana
|
2 Bscf/d | 34.2 miles (55 km)
|
42 in. (1 m)
|
FERC Authorization In April 2019
|
Louisiana Connector
|
Calcasieu, Beauregard, Allen, Evangeline, Cameron, And St. Landry Parishes, Louisiana, And Jefferson And Orange Counties, Texas
|
2 Bscf/d | 72 miles (116 km)
|
42 in.
(1 m)
|
FERC Authorization In April 2019
|
