Bechtel and Sempra join forces to double Port Arthur’s capacity

Sempra Infrastructure, a subsidiary of Sempra (NYSE: SRE) (BMV: SRE), has announced a significant milestone for the Port Arthur LNG Phase 2 project. The company has finalized a fixed-price engineering, procurement, and construction (EPC) contract with Bechtel Energy for this crucial expansion of the liquefied natural gas (LNG) facility in Port Arthur, Texas. This deal marks a pivotal development in the project’s timeline and underscores the commitment of both companies to advancing the global energy infrastructure.

Justin Bird, Chief Executive Officer of Sempra Infrastructure, expressed enthusiasm about the partnership with Bechtel, emphasizing the project’s potential to enhance the supply of reliable U.S. natural gas worldwide. According to Bird, this collaboration builds on the success of Port Arthur LNG Phase 1, which is currently under construction. He noted that Phase 2 is expected to significantly bolster the facility’s capacity and secure a steady supply of natural gas for international markets.

Paul Marsden, President of Bechtel Energy, highlighted the importance of the Port Arthur LNG Phase 2 project in addressing the growing global demand for cleaner energy. Marsden pointed out that the project will not only contribute to meeting energy needs but also spur economic growth and development in the local community. The partnership with Sempra Infrastructure is seen as a strategic move to deliver a transformative energy infrastructure project while providing substantial benefits to the regional economy.

Under the fixed-price EPC contract, Bechtel will be responsible for a comprehensive range of activities, including detailed engineering, procurement, construction, commissioning, startup, performance testing, and operator training. Additionally, the contract encompasses pre-final investment decision work to ensure cost and schedule certainty for the project. This approach aims to minimize risks and optimize the project’s execution.

The Port Arthur LNG Phase 2 project, which received authorization from the Federal Energy Regulatory Commission (FERC) in September 2023, is poised to enhance the facility’s total liquefaction capacity from approximately 13 million tonnes per annum (Mtpa) to up to 26 Mtpa. The expansion will involve the construction of two new liquefaction trains, each designed to increase production capacity and support the growing global demand for LNG.

Phase 1 of the Port Arthur LNG project is already underway, featuring trains 1 and 2, along with two LNG storage tanks and supporting infrastructure. The expected commercial operation dates for these trains are 2027 and 2028, respectively.

In June, Sempra Infrastructure entered into a non-binding heads of agreement with a subsidiary of Aramco, contemplating the purchase of 5 Mtpa of LNG and a 25% equity investment in the Port Arthur LNG Phase 2 project. Additionally, a non-binding agreement with INEOS was signed in December 2022 for an offtake capacity of 0.2 Mtpa.

Despite these advancements, the Port Arthur LNG Phase 2 project faces several challenges, including the need to finalize commercial agreements, secure necessary permits, obtain financing, and reach a final investment decision. These factors will be crucial in determining the project’s successful progression.