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Sempra Expects LNG Export OK By Year's End

Sempra Energy senior executives said Tuesday they remain optimistic that federal approvals will be in hand by the end of this year for a $9-10 billion liquefied natural gas (LNG) export terminal at existing import facilities in Cameron, LA.

CEO Debra Reed said her understanding is that the U.S. Department of Energy (DOE) should give approval for exports to countries without free trade agreements (non-FTA) with the United States before the end of this year.

"We were pleased to see that prior to the government shutdown, DOE had quickened in pace of LNG export approvals," Reed told analysts on a conference call. "We're currently second in the queue to receive our non-FTA permit from DOE, and we expect to receive that permit by year-end. The project remains on tract to receive all other necessary approvals so we can start construction in the first half of next year."

Reed expects Cameron's first production train to start in the second half of 2017, with subsequent trains to come online in six-month intervals thereafter.

Analysts peppered Reed and Sempra President Mark Snell with questions about the possibility of a future master limited partnership (MLP) for the Cameron facilities. Reed indicated a MLP is still under consideration but the timing and the form it takes will be determined by other factors.

As Cameron moves ahead, Sempra will be looking at an MLP opportunity, said Snell. "We think [the LNG export facility] would be a great asset to anchor an MLP for us, and the questions we look at are when will it start cash-flowing, and that would be the most opportune time to do that." The timing of the MLP probably would be in three to four years.

"When we look at this, forming an MLP or IPO, it is really critical to have a growth strategy and have clarity on how you grow the initial drop down of the assets," Reed said. "So we will try to time them when they align with our business interests."

Sempra is not under any pressure to set up an MLP now. "We're very seriously looking at the whole MLP issue and what are the right options for structuring it," said Reed, adding that Sempra wants to make sure it provides the kind of long-term growth it is looking for.

Sempra earned $296 million ($1.19/share) in 3Q2013, compared with $268 million ($1.09) in the same period in 2012. The latest results were impacted by a $60 million (24 cents/share) one-time charge on a writedown for its 25% stake in the Rockies Express Pipeline.

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