Construction advances on Sempra’s Port Arthur LNG export terminal

In March last year, Sempra Infrastructure, a unit of Sempra, took a final investment decision for the first phase of its Port Arthur LNG export project worth about $13 billion.

The first phase of the project is fully subscribed with 10.5 mtpa under binding long-term agreements.

Sempra Infrastructure entered into long-term agreements with each of ConocoPhillips, Ineos, Engie, RWE, and PKN Orlen.

Besides a 20-year LNG SPA for 5 mtpa of LNG, US energy giant ConocoPhillips is a shareholder in the project with a 30 percent stake.

Last year, Sempra Infrastructure also completed the sale of a 42 percent non-controlling interest in its Port Arthur LNG Phase 1 project to compatriot private equity firm KKR.

Sempra Infrastructure has a controlling 28 percent indirect interest in Phase 1 at the project level.

Dredging and LNG tank construction

Bechtel won the EPC contract which includes building two trains with a total capacity of about 13 mtpa and two storage tanks with a capacity of 160,000 cbm.

The expected commercial operation dates for train 1 and train 2 are 2027 and 2028, respectively.

Sempra Infrastructure’s unit Port Arthur LNG said in its monthly status report filed with FERC that construction-related activities during November 2024 included piling, foundation, steel erection, LNG tank construction, above-ground/under-ground pipe installation, and
dredging activities at the marine berth.

Port Arthur LNG said in the August construction report that dredging activities started at the marine berth.

Last year, US firm Great Lakes Dredge & Dock secured the dredging contract from Bechtel.

During November, Bechtel continued site preparation, soil stabilization (including DMM), wick drain, surcharge fill/removal and structural fill placement.

The firm said that Bechtel continued site preparation, soil stabilization (including DMM), wick drain, surcharge fill/removal, and structural fill placement

Bechtel also continued driving piles in OSBL and Train 2 areas, and loading platform construction activities, while the project also started receiving equipment deliveries at the material offloading facility (MOF)

In addition, the contractor continued LNG tank construction.

According to a separate FERC filling, Port Arthur LNG received approval to start construction activities of LNG Tank A and B roofs.

During December, Bechtel will continue site preparation, soil stabilization, wick drain, and structural fill placement.

Bechtel will also continue marine construction activities at the loading platform, and continue LNG tank construction, among other activities.

Expansion

Besides the first phase, Sempra Infrastructure is also working on the second Porth Arthur LNG phase.

In September last year, Sempra Infrastructure won approval from the US FERC for the proposed Phase 2 project, which includes the addition of two liquefaction trains capable of producing up to 13 mtpa of LNG.

The development of the proposed project would increase the total liquefaction capacity of the facility from some 13 mtpa to about 26 mtpa.

The proposed project would also include an additional LNG storage tank and marine berth and would benefit from some of the common facilities currently under construction that were previously approved as part of the Phase 1 permitting process.

In July, Sempra Infrastructure and Bechtel finalized a fixed-price engineering, procurement, and construction (EPC) contract for the second phase of the Port Arthur LNG export project.

As part of the new EPC contract, Bechtel will perform the detailed engineering, procurement, construction, commissioning, startup, performance testing, and operator training activities for the project, according to a statement by Sempra Infrastructure.

Sempra Infrastructure said the scope of the agreement also includes the ability to conduct pre-final investment decision work to better assure project cost and schedule certainty.

The development of the Port Arthur LNG Phase 2 project remains subject to a number of risks and uncertainties, it said.

This includes completing the required commercial agreements, securing and/or maintaining all necessary permits, obtaining financing, and reaching a final investment decision, among other factors.

The US Department of Energy still needs to approve Sempra Infrastructure’s non-FTA application for the project.

The Biden administration said in January it will pause pending decisions on exports of LNG to non-FTA countries until DOE can update the underlying analyses for authorizations.

Justin Bird, CEO of Sempra infrastructure recently said that the company expects to secure DOE’s non-FTA export approval for the second phase of its Port Arthur LNG export project in Texas in the first half of 2025.

Aramco deal

In June, Saudi Arabia’s energy behemoth Aramco signed a non-binding deal with Sempra to buy LNG from the second phase of the Port Arthur LNG export project.

Under the heads of agreement, Aramco aims to buy 5 mtpa of LNG for 20 years from the Port Arthur LNG expansion project.

The HoA further contemplates Aramco’s 25 project participation in the project-level equity of the second phase, the two firms said.

Sempra and Aramco expect to execute a binding LNG SPA and definitive equity agreements with terms substantially equivalent to those in the HoA, with the SPA and equity agreements subject to a number of conditions, they said.

Sempra recently said commercial discussions are progressing “very well” for the sale of remaining offtake volumes from the second Port Arthur LNG phase.

“As noted on our Q2 call, we saw an increased interest in Port Arthur 2, and I’m happy to say that interest has further increased since the call,” Bird said during Sempra’s third-quarter call.

Bird said, “momentum continues to build with commercial discussions for offtake, and project equity is ongoing, and I think we’re seeing better terms.”