Sempra Energy’s (NYSE: SRE) Sempra LNG & Midstream unit has entered into a project development agreement with a subsidiary of Woodside Petroleum Ltd. (ASX: WPL, OTC: WOPEY) to further advance the development of the proposed Port Arthur LNG natural gas liquefaction facility in Port Arthur, Texas.
The new agreement expands on the memorandum of understanding previously signed by the parties in June 2015 and provides a framework regarding how Sempra LNG & Midstream and Woodside will contribute their experience and share the costs related to the development, technical design, permitting, and commercial development of the liquefaction project.
The proposed Port Arthur LNG liquefaction project, located at a site previously permitted for an LNG regasification terminal along the Sabine-Neches Ship Channel, initially would be designed to include two natural gas liquefaction trains with a total export capability of approximately 10 million metric tons per annum (MMtpa), or 517 billion cubic feet per year, as well as LNG storage tanks and marine facilities for LNG ship berthing and loading. Additionally, a 3-mile portion of Highway 87 between the Intracoastal Waterway and Keith Lake Pass would be relocated and upgraded to accommodate the construction of a marine terminal berth for docking and loading of LNG ships.
Last year, Port Arthur LNG obtained approval from the U.S. Department of Energy (DOE) to export up to 10 MMtpa of domestically produced LNG to all current and future Free Trade Agreement countries; the authorization to export LNG to countries with which the US does not have a Free Trade Agreement is pending review by the DOE. In March 2015, Port Arthur LNG initiated the pre-filing process with the Federal Energy Regulatory Commission, which is anticipated to be completed later this year.
Any development of the project remains contingent upon completing required commercial agreements; acquiring all necessary permits and approvals; securing financing commitments and potential incentives; achieving other customary conditions; and making a final investment decision to proceed.