There are several story lines here:
- why did Sempra surge this past week?
- what's the status of Costa Azul?
- what's going on in Louisiana?
- what just happened in Mexico?
- the Ukraine-Russian conflict changes everything; this is not transitory; global impact on fossil energy
- all of a sudden those high prices paid for mineral acres in the Permian don't look so high any more
- only five LNG sources?
- US, Qatar, Iran, Russia, Australia? Others?
Germany's decision to go ahead with two new LNG import terminals which the Green Party has tried to delay / prevent since 2009 is considered a game changer. Think about that: for the past decade Germany has moved away from fossil fuel to renewable energy and everything I've read suggests it has been a huge failure. Now, a decade later, Germany says it will start work on those two LNG import terminals.
Meanwhile, it turns out, the LNG story much closer to home is absolutely fascinating.
Back in 2020 Sempra's Costa Azul announcement was huge. So, I was curious, how is that coming along.
Several linked articles:
- one: previously posted, seems like a downer but put in context with all that is going on, a feel-good story: Sempra's Cameron LNG downsizes expansion plans, touts emissions benefits -- S&P Global, January 19, 2022 -- just a couple of months ago:
- from 12 million mt/year of LNG, to 6.75
- from a two-train expansion to a single liquefaction train expansion (CP22-41)
- two: Sempra developing LNG exports plants in Louisiana, Mexico, Reuters, November 5, 2021 -- last fall;
- Costa Azul LNG export plant in Mexico "on time and on budge";
- to produce first LNG by end of 2024 -- about 18 months from now;
- 3.3 million tons per annum (MTPA)
- meanwhile, Cameron LNG
- to develop a roughly 6-MTPA four liquefaction train and optimize operations at the existing 15-MTPA, three train facility in Louisiana (which reminds me, I need a cup of Cafe de Monde)
- Sempra is also developing the roughtly 4.0-MTPA Vista Pacifico LNG export plan on Mexico's Pacific Coast located next to its refined products terminal in Topolobampo -- great trivia for tonight's cocktail party in Midland
- Vista Pacifico would be connected to two existing pipelines and wold source gas from the Permain basin in Texas and New Mexico for export to Asian markets, where LNG demand is growing fast
- at that time, Sempra noted that Europe was interested in more LNG .... and this was before the war, and before the announcement that Germany was going to go ahead with two new LNG import terminals
- three: from Natural Gas Intelligence, March 3, 2022 -- that's like yesterday, folks -- pipeline imports of US natural gas unhindered amid Russia-Ukraine panic --
- this time was a manic time in natural gas markets globally, and Mexico was not without its share of drama
- last Friday, February 25, 2022, just one week ago, Mexico's Cenagas declared a rare critical alert on the Sistangas national pipeline system which meant some users would see see natural gas restrictions
- this must have gotten the attention of Mexico's leadership
- problems related to a gas processing center and was an isolated event
- the situation was brought under control quickly but folks started worrying about natural gas supply and security in light of the Ukraine-Russian conflict
- this speaks volumes about the importance of Permian natural gas on a global scale
So, Sempra has at least three major projects:
- Cameron, Louisiana
- Costa Azul, Mexico
- Vista Pacifico, Mexico
Investors: time to re-look at the railroads ... no, that's not a typo, not Freudian, but three or four dots and one can connect the natural gas and US-Mexico rail.
- unfortunately, the only good one is/was KSU and it's merger with CN is under review by the anti-business Biden administration, and I won't invest in Canadian companies;
- a lot of folks are trying to stop this merger;
- and, here;
- but if Biden says no to the merger, then .... wow, wow, wow ...
- may have to hold my nose and consider Norfolk Southern
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