Sempra's Cameron LNG downsizes expansion plans, touts emissions benefits

Sempra proposed design changes to the expansion of its Cameron LNG export terminal that would lower the overall production capacity and postpone the timeline for commercially sanctioning the project to 2023.

Cameron LNG, the subsidiary that owns and operates the Louisiana LNG export facility capable of producing roughly 12 million mt/year of LNG, asked the Federal Energy Regulatory Commission in a Jan. 18 filing to approve the amended plans. The amendment would let the company pursue a 6.75 million mt/year, single gas liquefaction train expansion (CP22-41), in place of an existing authorization for a two-train expansion that would have added a total 9.97 million mt/year of production capacity. FERC approved a permit for the two-train project in 2016.

The subsidiary estimated, in a project schedule included in the filing, that FERC could approve its permit amendment by January 2023 to facilitate the start of construction by April of that year. The developer said commercial service could begin in the third quarter of 2027, nearly three years later than the currently permitted time for completing the project.

The developer told FERC that the proposed design changes would lower greenhouse gas emissions associated with the project and boost the reliability of the additional liquefaction train. Three trains are already operating at the Cameron LNG terminal.

Beyond producing less LNG, the developer said planet-warming emissions would be lower than they would have been if the original expansion project was built because the new design calls for electric drives for the additional LNG facilities. Previous plans had called for on-site gas turbine drives.

The new project also called for including tie-in facilities to enable the capture of CO2 from Train 4 and sequestration at facilities in the Gulf Coast "if and when such infrastructure is developed and assuming it is accessible to Cameron LNG both logistically and economically."

Plans to cancel the already authorized Train 5 would also entail eliminating a proposed fifth LNG storage tank, but the developer said there would be no change to existing marine facilities.

A spokesperson for Cameron LNG did not immediately respond to questions on Jan. 19.

Cameron LNG is a joint venture of Sempra Energy subsidiary Sempra LNG, TotalEnergies, Japan's Mitsui, and a company jointly owned by Mitsubishi and Nippon Yusen Kabushiki Kaisha. Sempra indirectly holds 50.2% of the Cameron LNG export project.

In 2021 there was a flurry of commercial activity tied to current and proposed US LNG export terminals amid strong global demand for natural gas. The main beneficiaries of the deal-making, especially with Chinese buyers, were Cheniere Energy and Venture Global LNG, as high spot prices in end-user markets spurred new term deals that carry a lower fixed price. At least two proposed US projects were also scrapped in 2021 — Pembina Pipeline's Jordan Cove in Oregon and Exelon-backed Annova LNG in Texas.

More than a dozen North American LNG developers are competing to advance their projects in the face of challenges that include pressure from buyers to be flexible on pricing and contract terms, as well as to bring down project costs. Developers have also faced growing concerns over greenhouse gas emissions associated with US LNG throughout the natural gas supply chain.

Besides Cameron LNG, Sempra is constructing its $2 billion Energía Costa Azul terminal on the West Coast of Mexico, which could start producing LNG in 2024 with a production capacity of 2.5 million mt/y before a potential expansion. The company is also developing the 11 million mt/year Port Arthur LNG export project in Texas and another midscale LNG export terminal in Mexico.

Sempra has ranked building the Energía Costa Azul facility on time and on budget as the top priority among its LNG projects. But executives said during their most recent earnings call in November 2021 that the company would then turn to a projected 7 million mt/year expansion of the Cameron LNG terminal. Sempra said it had all of the preliminary agreements in place for the final deals that will underpin the project.

"Our likelihood of going forward there we account as being relatively high," Sempra Energy CEO, President and Chairman Jeff Martin said at the time.