ConocoPhillips and Sempra sign HOA for Large-scale LNG projects

By Becky Schultz19 July 2022

The first phase of the project will include two liquefaction trains and LNG storage tanks plus associated facilities capable of producing up to 13.5 Mtpa of LNG. (Photo: Port Arthur Liquefaction Holdings)

ConocoPhillips has entered into a Heads of Agreement (HOA) with Sempra to acquire a 30% direct equity holding in Port Arthur Liquefaction Holdings LLC, a new large-scale LNG facility in Jefferson County, Texas, currently under development by Sempra subsidiary Sempra Infrastructure, plus an LNG offtake equivalent to approximately 5 million tonnes per annum (Mtpa) from the project.

The first phase of the project, which is fully permitted, is expected to include two natural gas liquefaction trains capable of producing, under optimal conditions, up to approximately 13.5 Mtpa, up to three LNG storage tanks and ancillary support facilities to liquefy and load LNG onto ships. Under the terms of the HOA, ConocoPhillips will supply the gas for its 5 Mtpa offtake and may provide additional gas supply services to the Port Arthur LNG facility, per the agreement’s announcement. In addition, ConocoPhillips will have the option to acquire certain LNG offtake and equity ownership from future contemplated LNG trains at the site, where a similarly sized Phase 2 project is already under development.

ConocoPhillips intends to leverage its strengths in natural gas marketing and trading and emissions reduction projects in support of the Port Arthur LNG project as well as its global LNG portfolio.

“The decision to enter into this agreement with Sempra provides us with a ground-floor opportunity to participate in premier LNG developments, reinforcing our commitment to helping solve the world’s energy supply needs as we transition to a lower-carbon future,” said Ryan Lance, chairman and chief executive officer, ConocoPhillips. “Sempra brings a long history of successful LNG project development, and we look forward to working together to provide reliable LNG to support the energy transition and strengthen U.S. and global energy security.”

Under the HOA, the companies will also:

  • evaluate a carbon capture and storage project for the Port Arthur LNG facility, along with other low-carbon projects for the site;
  • Sempra Infrastructure will have opportunity to participate in carbon capture and sequestration projects developed by ConocoPhillips in Texas or Louisiana in connection with the current project;
  • ConocoPhillips will have opportunity to acquire offtake and equity participation in Sempra’s development of the Energia Costa Azul LNG Phase 2 Project just north of Ensenada, Baja California, Mexico.

The HOA is a preliminary, non-binding arrangement, with development of the Port Arthur LNG project subject to concluding definitive agreements and resolving a number of risks and uncertainties, including the signing of engineering and construction contracts, obtaining financing and reaching a final investment decision between the parties.

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