Sempra greenlights Port Arthur LNG project

SEMPRA Infrastructure has given the financial greenlight for the development, construction, and operation of what could become one of the largest liquified natural gas (LNG) export facilities in the US, the Port Arthur LNG Phase 1 project in Jefferson County, Texas.  

However, the major project has been criticised by Private Equity Stakeholder Project, which aims to engage investors and empower stakeholders affected by private equity investments, for its expected emissions and incompatibility with efforts to mitigate climate change. 

Sempra Infrastructure, a subsidiary of US power and gas utility Sempra, and IEnova, said its export terminal is fully permitted. It is designed to include two natural gas liquefaction trains, two LNG storage tanks, and associated facilities such as marine units for vessel berthing and loading, to allow for long-term export of about 13m t/y of LNG.  

Total capital expenditure for the Port Arthur Phase 1 project is estimated at US$13bn, with costs shared by Sempra’s investment partner, private equity firm KKR. KKR agreed to acquire a 25%- 49% indirect, non-controlling interest in the project, which if built has the potential to become one of the largest LNG export facilities in the US, Sempra said. Phase 2 of the Port Arthur LNG facility is being developed as a similarly sized project, located adjacent to the Phase 1 project. 

The project developers said that Port Arthur LNG will have access to major natural gas supply basins throughout the US, including the vast supplies available in the Gulf Coast and Appalachian regions. Unconventional supply areas — such as the Barnett, Haynesville, Eagle Ford, Fayetteville and Woodford shale gas formations — also represent “attractive sources of supply” for the project. 

Sempra also finalised its joint venture with US oil producer ConocoPhillips, which last year said it would buy 5m t/y of LNG from the project under a 20-year sale and purchase agreement. ConocoPhillips will acquire a 30% non-controlling interest in the project, and will manage the feedgas supply requirements for the facility. 

Jeffrey W. Martin, CEO of Sempra said: "With strong customers, top-tier equity sponsors in ConocoPhillips and KKR, and a worldclass contractor in Bechtel, this project has the potential to become one of America's most significant energy infrastructure investments over time, while creating jobs and spurring continued economic growth across Texas and the Gulf Coast region." 

The project is expected to create an estimated 5,000 highly skilled jobs during construction. 

Supply contract awarded to Bechtel

Following the final investment decision, engineering and construction firm Bechtel, which has been contracted by Sempra to officially commence construction on the project, has issued an order to Baker Hughes to supply two main refrigerant compressors (MRCs). 

In total, Baker Hughes will supply four Frame 7 turbines paired with eight centrifugal compressors across two LNG trains, which have expected commercial operation dates of 2027 and 2028 for Train 1 and Train 2, respectively.

Climate concerns

Private Equity Stakeholder Project (PESP) has criticised the project’s high carbon footprint, as according to Sempra’s proposed air quality permit from the Texas Commission on Environmental Quality, the Port Arthur LNG project could potentially emit around 7.7m t/y of CO2. This is equivalent to the annual greenhouse gas emissions from 17 natural gas-fired power plants, PESP said. 

“Private equity’s investments in LNG are not aligned towards a just energy transition and efforts to mitigate climate change,” said Nichole Heil, PESP climate researcher. “The development of LNG facilities has been found to be incompatible with the necessary actions to limit global temperature increases. Simply put, it is widely debunked that LNG is a clean source of energy. The continued development of Port Arthur should be a concern to all who are watching the world’s temperature rise.”