Port Arthur LNG agreement next step in massive project, final investment decision looms
Published 12:15 am Saturday, January 11, 2020
Sempra Energy and Saudi Aramco announced their respective subsidiaries, Sempra LNG and Aramco Services Company, signed an Interim Project Participation Agreement, or IPPA, for the Port Arthur LNG export project under development in Jefferson County.
The agreement represents a milestone for both companies that signed a previous agreement in May for the purchase of 5-million tonnes per annum of liquefied natural gas and a 25 percent equity investment in the Port Arthur LNG project, according to information from Sempra.
Jefferson County Judge Jeff Branick said he met with representatives of the company recently.
“We are very excited for it and the potential for pushing the project further down the road,” Branick said.
Anya McInnis, PA LNG spokesperson, said the recently inked IPPA is the next step in the commercial agreement development process between PA LNG and Aramco Services.
Officials with Sempra agree.
“(This) announcement is a reflection of the growing alignment between our companies’ interest in the overall success of the Port Arthur LNG project,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy. “We have a tremendous amount of respect for Saudi Aramco and its leadership team and we are pleased we can support their success in the global natural gas markets.”
Saudi Aramco’s President and CEO Amin H. Nasser said, “The global demand growth for LNG is expected to continue in the coming years, and we see significant opportunities in this market. This agreement with Sempra Energy is another step forward for Saudi Aramco’s long-term gas strategy, and towards becoming the global leading integrated energy and chemicals company.”
The initial phase of the Port Arthur LNG project is fully permitted and is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities to enable the export of approximately 11 Mtpa of LNG on a long-term basis. Earlier this year, Sempra LNG initiated the Federal Energy Regulatory Commission pre-filing review for a subsequent expansion of the proposed project that would add two additional liquefaction trains for a total export capacity of approximately 22 Mtpa of LNG.
Timeline for construction
McInnis said they anticipate the final investment decision in the second quarter this year and construction to commence shortly thereafter.
The liquification project will take approximately four years to build and the road construction is anticipated to take 18 to 20 months.
A groundbreaking was held late last year for the relocation of a stretch of Texas 87 near Keith Lake.
The company, a division of Sempra LNG, is paying $140 million for the road reconstruction and donating the stretch of highway to the State of Texas. Port Arthur LNG, in return, will receive the old right-of-way. The relocation is intended to reduce the impact of erosion and flooding and provide a safer route away from the Intracoastal Waterway.
The next step, according to the proposed timeline, is a final investment decision by 2020 with the first LNG production by 2023.
The project, according to information from the company, is estimated to support the creation of up to 3,500 on-site engineering and construction jobs at the peak of construction and approximately 1,300 jobs averaged over the construction period of the project.
It is also estimated at least 100 full-time jobs would be created for operation and maintenance of the facility on a long-term basis. Additional jobs would be created by the construction and operation of the proposed pipelines.
Port Arthur LNG, LLC and the Polish Oil & Gas Company, or PGNiG, also have entered into a 20-year sale and purchase agreement for LNG from the Port Arthur LNG.
For more information, log onto saudiaramco.com.