Baker Hughes to supply compression for Port Arthur LNG Phase 1 Project
27 March 2023
Bechtel has awarded Baker Hughes a contract to supply main refrigerant compressors for two liquefaction trains at Sempra Infrastructure’s Port Arthur LNG Phase 1 project.
The contract also includes a total of four Frame 7 turbines, eight centrifugal compressors and two electric motor driven compressors for the plant’s boosting services. The equipment will enble the plant to produce about 13 metric tonnes per annum (mtpa) of LNG.
“We are delighted to be working with Bechtel and Sempra Infrastructure to supply critical equipment for this innovative LNG project,” said Baker Hughes Chairman and CEO Lorenzo Simonelli. “Baker Hughes has been committed to LNG for over 30 years, and today’s announcement builds on our track record of delivering high-availability and reliable LNG technology, with low total cost of operations, further enabling increased exports of LNG from the U.S. Gulf Coast to meet global energy needs.”
Packaging of the turbine/compressor train, a unique Baker Hughes offering, as well as manufacturing of the compressors and testing of the trains, will take place at Baker Hughes’ facilities in Italy. The expected commercial operation dates for Port Arthur LNG Phase 1 Train 1 and Train 2 are 2027 and 2028, respectively.
The announcement comes one week after Sempra Infrastructure made a final investment decision to fund and build Port Arthur LNG Phase 1. As part of the agreement, Sempra Infrastructure closed its joint venture with an affiliate of ConocoPhillips and agreed to sell an indirect, non-controlling interest in the project to an infrastructure fund managed by KKR. Additionally, Sempra Infrastructure announced the closing of the project’s $6.8 billion non-recourse debt financing and the issuance of the final notice to proceed under the project’s engineering, procurement and construction agreement.
“At Sempra, we believe bold, forward-looking partnerships will be central to solving the world’s energy security and decarbonization challenges,” said Jeffrey W. Martin, chairman and chief executive officer of Sempra. The Port Arthur LNG Phase 1 project is fully permitted and is designed to include two natural gas liquefaction trains, two liquefied natural gas (LNG) storage tanks and associated facilities.
Total capital expenditures for the Port Arthur Phase 1 project are estimated at $13 billion. The long-term contractable capacity of approximately 10.5 Mtpa is fully subscribed under binding long-term agreements with strong counterparties —ConocoPhillips, RWE Supply and Trading, PKN ORLEN S.A., INEOS and ENGIE S.A., all of which became effective upon reaching FID.
Sempra Infrastructure is also actively marketing and developing the competitively positioned Port Arthur LNG Phase 2 project, which is expected to have similar offtake capacity to Phase 1.
Sempra and ConocoPhillips closed their joint venture whereby an affiliate of ConocoPhillips has acquired a 30% non-controlling interest in the project, is purchasing 5 Mtpa of LNG offtake from the project under a 20-year sale and purchase agreement and is managing the project’s overall natural gas supply requirements. ConocoPhillips will also have certain rights to participate in future expansion projects in both equity and offtake.
“Our strategic LNG partnership with Sempra will help supply growing global demand for natural gas, a lower greenhouse gas emissions-intensity fuel expected to play a critical role in the energy transition and global energy mix going forward,” said Ryan Lance, ConocoPhillips chairman and chief executive officer.
Sempra Infrastructure announced an agreement whereby KKR will acquire a 25% to 49% indirect, non-controlling interest in the Port Arthur LNG Phase 1 project. Pursuant to the agreement with KKR, Sempra Infrastructure will retain certain economic and other rights with respect to the interest being transferred while granting KKR certain minority interest protections. KKR is making the investment primarily through its Global Infrastructure Investors IV fund.
Sempra Infrastructure is targeting 20% to 30% of indirect ownership interest in the project, subject to the closing of the KKR sale. Sempra Infrastructure has hired Bechtel Energy Inc to build the project.