Preliminary construction is moving ahead on the massive new liquefied natural gas (LNG) facility in Port Arthur, Texas, despite court setbacks and delay announcements issued by the White House.
To say the project is enormous would be an understatement. Putting the scale of this $13 billion investment into perspective, Port Arthur LNG is the country’s largest infrastructure project to break ground in 2024, bigger than the $12 billion Brightline West HSR System between Los Angeles and Las Vegas.
The Port Arthur facility is an undertaking headed by Sempra Infrastructure and is scheduled to be undertaken in two phases. Phase one, expected to be fully complete by 2028, will include two natural gas liquefaction trains, two LNG storage tanks and associated facilities with a projected capacity of approximately 13 Mtpa (million tons per annum).
Phase one will be built along a portion land currently owned by Sempra, adjacent to the deep water Sabine-Neches ship channel, strategically located near both abundant natural gas resources and a North American gas pipeline system.
Sempra is justifiably excited about the prospects for the facility.
“Port Arthur LNG Phase 1 will stimulate local, regional and national economies by creating U.S. jobs, supporting small businesses and strengthening the U.S. natural gas sector’s leadership position as a reliable partner in building energy security worldwide.”
The company expects an estimated 5,000 highly skilled jobs will be created during construction, with measurable boosts to the economies of Port Arthur and Jefferson County.
In September 2023, Sempra completed the sale of a 42 per cent indirect, non-controlling interest in phase one to investment management company KKR last September. Sempra will retain a 28 per cent interest, with ConocoPhillips holding the remaining 30 per cent.
“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 officer.
Expanding LNG is imperative to American energy security, said Texas Gov. Greg Abbott.
“Sempra’s selection of Port Arthur as the location for a new natural gas liquefication and export terminal is a strategic decision that will cement Texas’ position as the energy capital of the world. With a highly skilled workforce and business-friendly climate, and as a national leader in LNG exports, Texas is the prime location to expand LNG operations to unleash the United States’ full economic potential in such a critical industry.”
However, work is currently proceeding under a cloud of court challenges and White House delays.Last November, the U.S. Court of Appeals for the Fifth Circuit ruled the Texas Commission on Environmental Quality (TCEQ) failed to impose the same emissions limits on the Port Arthur plant as on other projects, including the Rio Grande LNG project now under construction. That decision sent the Port Arthur LNG permit application back to the TCEQ for new evaluation.
Then in January, the Joe Biden administration announced it would delay consideration of future LNG export facilities, citing environmental concerns. This enraged Texas House Speaker Dade Phelan calling it “classic election year pandering.”
Although Sempra is proceeding with phase one under existing permits while it awaits developments from the TCEQ, Phelan worries phase two may be held up, hindering the region’s economic and job growth outlook.
However, on July 1, a U.S. District Court judge in Louisiana overruled the White House delays while 16 states challenge them in federal court.
Global firm Bechtel Energy had earlier been announced as the project’s engineering, procurement, construction and commissioning contractor.
In its January status report filed with the Federal Energy Regulatory Commission (FERC), Sempra Infrastructure’s Port Arthur LNG unit said Bechtel was continuing to mobilize equipment and personnel to the project site, and conducting safety and environmental training. Construction-related activities undertaken that month included soil stabilization, delivery of concrete piles and sheet piling for the marine berth and other foundation and grounding work.
Sempra has said the proposed phase two of the Port Arthur project, previously approved by FERC, is expected to increase the total liquefaction capacity of the facility to approximately 26 Mtpa. There would be two additional liquefication trains and an additional LNG storage tank and marine berth that would benefit from some of the facilities currently under construction and previously approved under phase one’s permitting process.
In anticipation of phase two moving ahead, Sempra and energy and chemical giant Aramco have executed a non-binding 20-year sale and purchase agreement for an LNG offtake of 5.0 Mtpa. Sempra will be seeking other global customers in Europe, Asia and elsewhere as they move away from their dependency on coal for power production.
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