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Sempra Energy’s efforts to become a big player in the booming global liquefied natural gas market received a boost this week.
Korea Gas Corporation. South Korea’s state-owned natural gas supplier and the world’s second-largest importer of LNG agreed to establishing a framework with Sempra and Woodside Petroleum to consider development of a proposed LNG project in Port Arthur. Texas.
`We`re pleased to be collaborating with one of the world`s largest LNG buyers and importers.` Octávio M.C. Simões. president of Sempra LNG &. Midstream said in a statement.
Woodside. based in Australia. and Sempra have partnered on the project on the Texas Gulf Coast that is designed to include two natural gas liquefaction trains. LNG storage tanks. marine berths and ancillary facilities.
The memorandum of understanding does not commit any of the parties to buy or sell LNG or participate in the Port Arthur project but it is important because lining up gas purchasers is crucial before LNG facilities are constructed.
“Really the key to getting these things built is having those good. solid contracts with investment-grade counterparties.” said Andy Smith. senior utilities analyst at Edward Jones. “So that’s certainly a good signal.”
Sempra executives last year estimated the cost of the Port Arthur facility at $8 billion to $9 billion. with the project up and running by 2021 or 2022.
The San Diego-based Fortune 500 company already has an LNG facility under construction in Louisiana. called Cameron.
The $10 billion Cameron project is a partnership among Sempra. Mitsui and Mitsubishi of Japan and France-based ENGIE with commitments to take delivery of LNG — in which natural gas is cooled to minus-260 degrees Fahrenheit and condensed into liquid — and ship it to clients around the world.
LNG processing units are called “trains.” and Cameron Train 1 is slated to be in service in mid-2018. Train 2 in late 2018 and Train 3 in mid-2019.
Sempra is also considering expanding its LNG import facility outside Ensenda. Mexico — called Costa Azúl — to include export capabilities.
The boom in the production of natural gas. due largely to hydraulic fracturing and horizontal drilling techniques. has put the U.S. on track to become a worldwide gas exporter for the first time in decades.
South Korea is one of the world’s top destinations for LNG shipments and with the election of a new president who pledged to transition his country away from nuclear power. South Korea is expected to increase its reliance on natural gas imports.
LNG imports could also ease trade tensions between South Korea and President Donald Trump. The U.S. ran a $17 billion trade deficit in goods and services with South Korea in 2016.
Early next month. Korea Gas will receive its first LNG cargo from the U.S.. coming from an export terminal in Louisiana owned by Cheniere Energy.
In addition to its announcement with Sempra and Woodside. Korea Gas this week also said it is looking at investments in LNG facilities in Alaska and another in Louisiana.
