Sempra Energy has secured two approvals from the Department of Energy (DOE) for global exports of liquefied natural gas (LNG) via the Energía Costa Azul (ECA) liquefaction project under development on Mexico’s Pacific coast.
The authorizations allow Sempra “to export U.S. produced natural gas to Mexico and to re-export liquefied natural gas (LNG) to countries that do not have a free-trade agreement (non-FTA) with the U.S., from its Phase 1 and Phase 2 liquefaction export facilities in development in Baja California, Mexico,” Sempra said Friday.
The two-phase ECA liquefaction project, a joint-venture between Sempra LNG and Infraestructura Energética Nova (IEnova), will be built adjacent to Sempra’s existing ECA LNG receipt terminal near the city of Ensenada. IEnova is Sempra’s Mexico subsidiary.
“ECA LNG will source natural gas from some of the fastest-growing production regions in the U.S. and provide our customers with a competitive advantage in accessing world markets, especially Asia,” said Sempra CEO Joseph A. Householder.
The approval comes amid a historic natural gas supply glut in the Permian basin of West Texas and Southeastern New Mexico driven by soaring production and insufficient takeaway capacity. The trend has driven spot natural gas prices in West Texas into the negatives in recent days.
Global demand for LNG, meanwhile, is projected to rise 75% from 2019 to 2035, with Asia leading the growth, Carlos Ruiz Sacristán, chairman of Sempra North American Infrastructure, said last week at Sempra’s annual investor day in San Diego.
“The timing of these approvals is great news as we meet with customers and partners this week in Shanghai,” Sempra CEO Joseph A. Householder said Friday.
The DOE authorizations allow the export of 636 Bcf/year, meaning that the project’s second phase would require additional DOE approval to export its full expected capacity, Sempra said.
ECA Phase 1 entails a single train LNG facility that would utilize the terminal’s existing LNG storage tanks, marine berth and associated facilities, and have an offtake capacity of approximately 2.4 million metric tons/year (mmty).
IEnova CEO Tania Ortiz said that a final investment decision for the ECA Phase 1 is expected this year. Sempra announced last November that it had signed heads of agreements with affiliates of Total S.A., Mitsui & Co., Ltd., and Tokyo Gas Co., Ltd. for the entirety of ECA Phase 1’s capacity.
ECA Phase 2 would include the addition of two trains and one LNG storage tank, and would have an offtake capacity of roughly 12 mmty. Sempra signed a memorandum of understanding in November 2018 with Total for the offtake of up to 4 mmty from ECA Phase 2.
Sempra LNG President Justin Bird said last week that the company is exploring options to expand the size of ECA Phase 2.
The export authorizations follows similar DOE approvals for Mexico Pacific Limited, LLC (MPL), which is developing a liquefaction project on the Gulf of California in Mexico’s Sonora state.
MPL is permitted for up to 12 mmty of LNG liquefaction capacity at the site, with initial construction of up to 4 mmty using modular LNG technology.
“Leveraging existing pipeline routes to liquefy low cost U.S. shale gas on the Pacific coast of Mexico, the FTA and non-FTA authorizations reinforce MPL’s supply synergy with Asia Pacific customers,” MPL said last week.
President Josh Loftus added, “We are pleased to receive the ongoing regulatory support of the U.S. and Mexican governments as we build momentum towards taking a final investment decision in the first half of 2020 and start up in the second half of 2023.”
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