Construction moving forward 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 starts

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 August 2024 included piling, foundation, steel erection, LNG tank construction, and above-ground/under-ground pipe installation.

“Of note, was the initiation of dredging activities at the marine berth,” it said.

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

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

The firm said that Bechtel continued driving piles in OSBL areas, MOF and loading platform construction activities, foundation, grounding work, and structural steel erection in ISBL Train 1.

Bechtel also continued driving piles in ISBL Train 2, concrete placement in ISBL Train 2, construction of laydown areas, and foundation work in the OSBL.

During September, Bechtel will continue site preparation, soil stabilization, wick drain and structural fill placement, as well as continue with driving piles in train 2 and OSBL

Bechtel will continue marine construction activities, foundation, grounding work, and structural steel erection in ISBL Train 1.

Port Arthur LNG also said it has received approval to construct the LNG outer tank wall for storage tanks and notice to proceed with OSBL spill containment trench construction.

The firms said both of these were initiated.

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 for the US FERC for the proposed Phase 2 project, that 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.

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

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.

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.