Sempra Energy’s Energía Costa Azul LNG (ECA) receives U.S. Non-FTA approval for LNG export project In Baja Mexico

Authorizes the export of U.S. LNG from both ECA LNG Phase 1 and Phase 2

– Once project is operational, U.S. natural gas could arrive at Pacific Rim locations in 11 days

Sempra Energy (stock ticker: SRE, $SRE) subsidiary Energía Costa Azul (ECA) LNG received two authorizations from the U.S. Department of Energy last week.

The approvals allow Sempra LNG to export U.S. produced natural gas to Mexico and to re-export liquefied natural gas (LNG) to countries that do not have a free-trade agreement (non-FTA) with the U.S. The authorization applies to both Phase 1 and Phase 2 liquefaction-export facilities in development at the California energy giant’s Baja California, Mexico, location.

Sempra Energy’s President and COO Joseph A. Householder believes his company’s West Coast North America export location could be a game changer. Householder said the project will source natural gas from some of the fastest-growing production regions in the U.S.—the Permian Basin—and “provide our customers with a competitive advantage in accessing world markets, especially Asia.”

The delivery time from Sempra LNG’s Mexico LNG export plant ECA to Asia is only 11 days.

North America's Planned West Coast LNG Export Project Checks a Box

Sempra has five LNG export projects in the works in North America – two phases at its ECA project in Mexico, two phases at its Cameron LNG location and a planned project af Port Arthur, Texas. Source: Sempra Energy investor presentation.

Sempra aiming U.S. LNG at world’s fastest-growing LNG market

The DOE approval coincided with the company’s participation in the 19th International Conference & Exhibition on LNG (LNG2019), in Shanghai—the largest LNG event to ever be held in China. China is the world’s fastest-growing LNG market.

ECA LNG Phase 1 development opportunity is a single train LNG facility to be located adjacent to the existing LNG receipt terminal. It is expected to utilize current LNG storage tanks, marine berth and associated facilities.

North America's Planned West Coast LNG Export Project Checks a Box - Oil & Gas 360

Source: Sempra LNG

Phase 2 of the project will include the addition of two trains and one LNG storage tank. The DOE authorizations allow the export of 636 billion cubic feet (Bcf) a year of U.S. sourced LNG from these infrastructure projects. Phase 2 of the project will require additional DOE approval in order to export its full expected capacity.

North America's Planned West Coast LNG Export Project Checks a Box - Oil & Gas 360

Source: Sempra LNG

The existing ECA receipt terminal was the first LNG receipt terminal constructed on North America’s West Coast. Located about 15 miles north of Ensenada, Baja California, it began commercial operations in 2008 and is capable of processing up to 1 Bcf of natural gas per day.

Customers for Mexico 

Last November, Sempra Energy announced that its subsidiaries IEnova and Sempra LNG had signed Heads of Agreements (HOAs) with affiliates of Total S.A., Mitsui & Co., Ltd. and Tokyo Gas Co., Ltd. for Phase 1 of the ECA LNG project, subject to reaching definitive agreements.

TechnipFMC and Kiewit were selected as the engineering, procurement, construction and commissioning (EPC) contractors for the project, subject to reaching a definitive agreement on the EPC contract.

Many steps left to go

Development of the ECA LNG liquefaction project is contingent upon obtaining binding customer commitments, completing the required commercial agreements, securing all necessary permits, including additional export authorization from the Mexican and U.S. governments, obtaining financing, incentives and other factors, and reaching a final investment decision.

Sempra’s lofty mission

Sempra Energy has committed to an aggressive mission to become North America’s premier energy infrastructure company. This involves power generation, gas pipelines, electricity transmission and LNG exports.

North America's Planned West Coast LNG Export Project Checks a Box - Oil & Gas 360

Source: Sempra Energy Investor Presentation

Committing to natural gas

It has reinforced its commitment to North America’s natural gas with five LNG export projects in the works, and the company has been divesting its renewable assets.

North America's Planned West Coast LNG Export Project Checks a Box - Oil & Gas 360

Source: Sempra Energy Investor Presentation

Sempra unloading its renewable portfolio

In December 2018 Sempra closed the sale of its U.S. solar assets to Consolidated Edison and in February American Electric Power’s renewable energy subsidiary announced it would buy Sempra Renewables for approximately $1.056 billion, including 724 MW of operating wind generation and battery assets.

San Diego-based Sempra said it has the largest U.S. customer base of any utility and that it delivers energy to 40 million consumers worldwide. That number will grow when ECA begins liquefying natural gas in Mexico and loading tanker cargoes destined for an 11-day voyage to Asian customers.

 


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