Tuesday, November 17, 2020

Sempra's Mexico LNG Export Terminal -- Biggest LNG Story This Year? -- Update -- November 17, 2020


December 10, 2020: RBN Energy update.

December 9, 2020: Total takes stake

Later, 9:53 p.m. CT: from a reader --

This particular project is intriguing on so many levels. 
The initial Phase 1 will produce a modest ~3 mtpa (million tonnes per annum), but the total project - which includes Phase 2 - will produce almost 15 mtpa when completed.

The 'clock' will start with today's FID and it will be instructive to the entire LNG industry at just how quickly this plant will start producing
They are employing the same modular concept that Calcasieu Pass is using with great effect. 
Unlike Calcasieu Pass, this ECA project already has berthing and storage facilities as it has been an LNG import terminal for years
While pipelines already exist, some midstream outfit embarked upon huge capacity upgrades out of West Texas to the Mexican  (Baja) border several months ago. [Comment from blog author: this I find most interesting.]

Biggest attribute of ECA is its location, being on the Pacific coast. [Comment: because of its location, I almost consider this an American LNG export terminal. My hunch is that SRE knew it would be close to impossible to get a greenfield LNG export terminal off the coast of US-California. Baja-California works out just fine. LOL.] 
Not only will this bypass the need for using the Panama Canal and its fees, the trip to Asia will be very short.

This could be about the most profitable LNG project extant IF things play out as expected. [Comment: wow, that is very, very interesting ... I bet every LNG export operator was scrambling to find a west coast terminal and SRE pulled it off. Very, very interesting. Wow, this is fascinating.]

Note how fast SRE announced the contractor -- one day after the permit issued.  

November 17, 2020, from SeekingAlpha:

  • Sempra Energ says it reached a final investment decision to build the Costa Azul liquefied natural gas export project in Baja California, Mexico, making it the only LNG export project in the world to reach FID this year.
  • ECA Liquefaction, the joint venture between Sempra and its IEnova Mexico subsidiary, will build the plant at the existing Costa Azul LNG import plant at an estimated ~$2B capital cost, with production of first LNG expected in late 2024. [Cameron was forecast to cost $8 - $10 billion.]
  • The plant, which will have a nameplate capacity to produce 3.25M metric tons/year of LNG, already has 20-year agreements with units of Mitsui and Total for the purchase of ~2.5M mt/year from the project's first phase.
  • Mexico's President Lopez Obrador (AMLO) said last week that the government would give the project an export permit as long as the company helped to offset an oversupply of gas in the area.

Original Post

Just the other day, November 13, 2020:

SRE: Mexico will give LNG conditional export permit -- AMLO! Link here.

  • Sempra Energy's local IEnova unit likely will receive an export permit for a proposed liquefied natural gas facility in northwest Mexico, as long as the company helps offset an oversupply of gas in the area, Mexican Pres. Lopez Obrador says. 
  • The President says he is inclined to approve the permit but stresses what he considers excess natural gas in the area around the northern Pacific coast, given that state-owned power company Comision Federal de Electricidad does not use the fuel to generate electricity. 
  • Lopez Obrador says supply contracts signed by the previous government obliged CFE to buy natural gas that is not needed
  • The comments appear to walk back the government's interest in requiring IEnova to build a second LNG export facility before approving the pending plant in Ensenada, which was reported in August.

Today: TechnipFMC wins $1-billion-plus contract for Sempra's Mexico LNG plant. Link here. 

  • TechnipFMC after-hours on news it received a notice to proceed for a major Engineering, Procurement and Construction contract by Sempra Energy and IENova at the Energía Costa Azul liquefied natural gas facility in Mexico; for TechnipFMC, a "major" contract exceeds $1B. 
  • The Costa Azul project, which won a final investment decision today, will add a natural gas liquefaction facility with nameplate capacity of 3.25M metric tons/year to the existing regasification terminal using a compact and high efficiency mid-scale LNG design. 
  • TechnipFMC has been involved in the project since 2017, including the delivery of the front end engineering design. 
  • Earlier this month, TechnipFMC reportedly was set to win a "huge" offshore engineering contract from Qatargas.

In its press release, Sempra refers to the Costa Azul (blue coast) project as a "landmark" project. 

Note: Costa Azul LNG is a sea port and natural gas processing center, located 15 miles north of Ensenada, Baja California, Mexico. Ensenada is about 50 miles due south of Tijuana along the west coast of Baja.

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