Mexico Pacific Limited LLC (MPL) has awarded a front-end engineering design (FEED) contract to Technip USA for its planned liquefied natural gas (LNG) project on Mexico’s Pacific Coast.
The contract represents “one of the final milestones to moving the project into construction and operation,” according to a company statement.
Last year, Mexico’s energy regulator Comisión Reguladora de Energía (CRE) authorized construction of the LNG project on the Gulf of California in Sonora state. The project has permission from the U.S. Department of Energy (DOE) to export gas from Arizona to Mexico and from there to re-export LNG globally. MPL is targeting buyers in Japan, South Korea and China given the project’s strategic geographic position.
The facility at Puerto Libertad has the green light to export up to 12 million metric tons/year (mmty) for 20 years, with the gas shipped south from the United States via existing cross-border transmission lines, including Kinder Morgan Inc.’s Sierrita Gas Pipeline LLC, which extends from the border near Sasabe, AZ. The project foresees initial construction of up to 4 mmty using modular LNG technology.
The combination of the shorter shipping distance to Asia from its West Coast location and its access to low-cost U.S. gas allows the project to deliver some of the lowest landed cost LNG into Asia, according to MPL.
MPL is “on track” to take a final investment decision in early 2021 “and establish a world-class North American LNG export facility on the West Coast of Mexico,” CEO Doug Shanda said. MPL plans to bring the facility into service in 2024.
In January, MPL brought on former Cheniere Energy Inc. executive Shanda to be CEO in an apparent attempt to expedite the project. Prior to Cheniere, Shanda was the senior project engineer, technical manager and plant manager for the Peru LNG liquefaction plant in Melchorita, Peru, which was the first, and remains the only, LNG export project in South America.
MPL is backed by Avaio Capital, a build-to-core infrastructure investment firm which in aggregate has completed more than $4 billion of equity transactions and $50 billion-plus in infrastructure development and construction projects across the water, transportation, digital and energy sectors.
The MPL project is one of two LNG export projects on Mexico’s Pacific coast close to FID, joining Sempra Energy’s Energía Costa Azul (ECA) liquefaction project in Baja California. ECA is on track for FID later this month, company officials said in a February earnings call.
Last year, ECA also received DOE authorizations allowing Sempra to export U.S.-produced natural gas to Mexico and then re-export it globally.
The two-phase ECA liquefaction project, a joint venture between Sempra subsidiaries Sempra LNG and Mexico unit Infraestructura Energética Nova (IEnova), would be built adjacent to Sempra’s existing ECA LNG receipt terminal near the city of Ensenada. The Sempra subsidiaries have already secured heads of agreement with Total SA, Mitsui & Co. Ltd. and Tokyo Gas Co. Ltd. to take capacity from Phase 1 of the proposed project. The three companies each potentially could purchase 0.8 mmty from Phase 1.