Sempra Reaches FID for Port Arthur LNG Project

Port Arthur LNG is expected to handle 13 mtpa of liquefied natural gas, with first LNG cargoes expected in 2027.

The Port Arthur LNG facilities.
Source: Sempra Energy

US energy infrastructure developer Sempra Energy announced that its 70%-owned subsidiary Sempra Infrastructure reached a final investment decision (FID) to build its $13-billion Phase One natural gas liquefaction export project in Jefferson County, Texas.

Sempra Infrastructure Phase 1 of the Port Arthur LNG project will see the design and installation of two production trains, LNG storage tanks, and associated facilities capable of producing up to about 13.5 mtpa of LNG that are expected to begin commercial operations in 2027 and 2028, respectively. A similarly sized Port Arthur LNG Phase 2 project is under active marketing and development.

Additionally, Sempra Infrastructure closed its joint venture with ConocoPhillips, with the US independent acquiring a 30% non-controlling interest in the project and is purchasing 5 mtpa of LNG offtake from the project under a 20-year sale and purchase agreement.

ConocoPhillips also is managing the project’s overall natural gas supply requirements and will have certain rights to participate in future expansion projects in both equity and offtake.

“Our strategic LNG partnership with Sempra will help supply growing global demand for natural gas, a lower greenhouse gas emissions-intensity fuel expected to play a critical role in the energy transition and global energy mix going forward,” said Ryan Lance, ConocoPhillips chairman and chief executive. “ConocoPhillips has more than 60 years of experience with LNG, and we look forward to continuing to build our LNG portfolio and expanding our role in delivering a lower-carbon future that strengthens US and global energy security.”

Investment firm KKR & Co. has agreed to a minority stake, with a 25 to 49% indirect, non-controlling interest in the Port Arthur LNG Phase 1 project.

“We are pleased to invest in this critical energy infrastructure project and extend our strategic partnership with Sempra and their world-class team,” said James Cunningham, partner at KKR. “Phase 1 will create new jobs, support American economic growth, and deliver reliable and cleaner energy during the global energy transition. Consistent with KKR Infrastructure’s strategy of seeking stable and predictable returns for investors, our investment in Phase 1 is backed by robust cash flows through long-term contracts with high-quality counterparties.”

The company also announced the closing of the project’s $6.8 billion non-recourse debt financing and the issuance of final notice to proceed to Bechtel Energy under the project’s engineering, procurement, and construction agreement.

“We’re proud to partner with Sempra to deliver a world-class LNG facility. Building from mature, scalable energy technologies helps safeguard our energy supplies and promote the transition to lower-carbon energy,” said Brendan Bechtel, chairman and CEO of Bechtel. “Bechtel has a record of delivering LNG infrastructure on the US Gulf Coast and bringing quality jobs and training opportunities to local communities. The 5,000 construction jobs this project creates will provide outstanding opportunities for craft professionals—growing a skilled workforce that will benefit the region for years to come.”

Over the past year Sempra Infrastructure has announced the substantial completion of marketing for Phase 1 with the signing of a series of nonbinding agreements with the Polish Oil & Gas Company, RWE Supply & Trading, Engie, INEOS Energy Trading, and ConocoPhillips.

The Port Arthur LNG project is the second FID announced in a week, with Venture Global announcing it had given the greenlight to proceed on its Plaquemines LNG Phase Two project along the Louisiana Gulf Coast.