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Pivot to the South: LNG Plants Under Development by Sempra Energy in Louisiana and Mexico11/18/2021
Sempra Energy, one of the key U.S. gas exporters, announced earlier in the month that it will continue to build liquefied natural gas (LNG) export plants in Louisiana and Mexico, while also continuing to develop Phase 1 of the Costa Azul LNG export plant in Mexico.
At the company's earnings call, Justin Bird, CEO of Sempra Infrastructure, assured that Costa Azul would produce its first LNG by the end of 2024. After completion, It is expected that Costa Azul will produce approximately 3.3 million tonnes of LNG per annum.
In addition, Sempra would develop the 4.0-mmtpa Vista Pacifico LNG export facility located next to the company's Terminal for Refined Products in Topolobampo.
A slated pipeline connecting Vista Pacifico to two existing grids would simultaneously provide gas from the Permian basin in Texas and New Mexico to Asian markets that are seeing a rapid increase in LNG demand.
Vista Pacifico is being built in conjunction with the Energia Costa Azul (ECA) LNG project currently under construction in Baja California, for which the company has been awarded permits by the U.S. Energy Department to export to countries with an FTA, approval for non-FTA countries is expected in the coming months.
A mid-size LNG facility, Vista Pacifico would be supplied with lower-cost natural gas from the Permian Basin to export to high-demand Asian markets. Business operations associated with it will fall under the Sempra Infrastructure business platform.
Sempra Energy officials also assured that they will continue to be focused on putting together a roughly 6- million ton-per-annum fourth train at Cameron LNG, as well as optimizing operation at the 15- million ton-per-annum, three-train facility in Louisiana.
It was mentioned that both the Vista Pacifico project and the Cameron expansion might be sanctioned before the Port Arthur LNG project in Texas.
With regards to LNG-related inquiries from customers, the company sees a real increase in requests directed not only from Asia but from Europe and South America as well. In line with this, Sempra's long-term LNG development forecast suggests that the demand for LNG will grow between mid-to-high single digits.
Once marketing begins, Sempra's management expects Vista Pacifico to be oversubscribed.
Additionally, according to the company's analytics, there's a tremendous amount of recognition about the role of natural gas and specifically, LNG in Europe at the moment. And there's certainly a new risk premium being assigned to pipeline gas. This sentiment also plays a favorable role in the company's outlook.
In particular, October saw prices for natural gas in Europe and Asia reach record highs for the first time in a while. Delays in pipeline gas flowing from Russia is one of the reasons for such hasty change among the EU-nations politics as well as the reason behind boosted gas fees, as cited by the company's CEO.
Therefore Sempra Energy's comfortable position is a direct result of good market decisions, given that the company's capacity to deliver energy directly into Europe and Asia edges out most of its direct competitors in respective regions.
Texas Cheniere and Swiss Glencore had entered into a free-on-board agreement for approximately 0.8 million tonnes of LNG per annum, starting in April 2023 for 13 consecutive years. This SPA demonstrates the commercial momentum Cheniere has been enjoying and marks an important milestone, as the company lays the groundwork for a final investment decision on Corpus Christi Stage 3, which is expected to occur next year.
On November 16 Diamondback Energy Inc. decided to expand in the Midland portion of the Permian Basin with the acquisition of Lario Permian LLC in a $1.55 billion cash-and-stock transaction. The Permian operator announced another billion-dollar agreement to purchase FireBird Energy LLC, a private Midland Basin operator. In total, Diamondback is paying almost $3.3 billion to extend in the Midland Basin. When combined with the pending FireBird acquisition, Diamondback is increasing its Midland Basin footprint by roughly 83,000 net acres, is adding 500 high-quality drilling opportunities that compete for capital with the current development plan and is raising the 2023 production profile by almost 37,000 bbl/d of oil (50,000 boe/d).
In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.
On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.