San Diego-based Sempra Energy has reached a final investment decision (FID) for the development, construction and operation of a natural gas liquefaction plant in Mexico’s Baja California.
Energía Costa Azul (ECA) is a liquefied natural gas (LNG) joint venture between subsidiaries Sempra LNG and Infraestructura Energética Nova (IEnova). It is the first LNG export project in Mexico to be sanctioned and the first project worldwide to reach FID in 2020.
“This project would be the first LNG export facility on the Pacific Coast of North America that can help connect abundant natural gas supplies from Texas and the Western U.S. directly to markets in Mexico and countries across the Pacific Basin,” said CEO Justin Bird.
Target markets for the exports are East Asian nations. The project would source U.S. gas, and it has an advantage over the U.S. Gulf Coast LNG facilities because vessels do not have to traverse the Panama Canal.
ECA includes a $400 million pipeline in Mexico. The plant would be built adjacent to the company’s existing ECA LNG receipt terminal near Ensenada. Estimated capital expenditures for Phase 1 are $2 billion with first production expected in late 2024.
The single-train liquefaction facility will have a nameplate capacity of 3.25 million metric tons per year (mmty) with an initial offtake capacity of approximately 2.5 mmty of LNG.
IEnova CEO Tania Ortiz Mena said the project would “help position Mexico as a key player in the global trade of natural gas.”
Company officials have said throughout the year that sanctioning was being held up because it lacked an export permit from the Mexican authorities. Last week, President Andrés Manuel López Obrador said the residents of Ensenada had responded positively to the project and that the permitting issue was close to being resolved.
However, Sempra officials noted that successfully developing and constructing ECA and its other LNG projects “are subject to a number of risks and uncertainties, and there can be no assurance that these projects will be completed.”
Sempra is also planning an expansion at its Cameron LNG plant in Louisiana along with a new liquefaction plant in Port Arthur, TX, east of Houston.
The Mexico project has secured definitive 20-year sale and purchase agreements with Mitsui & Co. Ltd. and an affiliate of Total SE for 2.5 mmty from Phase 1. ECA also is working toward a potential equity investment by Total SE. Total also has a stake in the Driftwood LNG export project in Louisiana.
In February, ECA signed off on a lump-sum, engineering, procurement and construction contract with an affiliate of TechnipFMC plc for Phase 1.
Mexico in September included a separate LNG project further down the Pacific Coast as part of a new public-private infrastructure plan aimed at jumpstarting economic activity.
The Salina Cruz LNG project in Oaxaca state would be spearheaded by Mexico’s Comision Federal de Electricidad (CFE), which holds most of the country’s gas pipeline capacity. In a potential third LNG project also on the Pacific Coast, Mexico Pacific Ltd. LLC expects sanctioning by the end of next year on a plant in Puerto Libertad, Sonora.
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