A Sempra Energy (NYSE: SRE) unit, Cameron LNG, on Tuesday announced that the company has signed commercial development agreements with Mitsubishi Corporation (8058.TYO) and Mitsui & Co., Ltd. (8031.TYO) to develop and construct a natural gas liquefaction export facility at the site of Cameron LNG receipt terminal in Hackberry, La.
The commercial development agreements bind the parties to fund all development expenses, including design, permitting and engineering, as well as to negotiate 20-year tolling agreements, based on agreed-upon terms outlined in the commercial development agreements. Each tolling agreement would be for 4 million tonnes per annum (Mtpa). Negotiations with other parties for the export of the remaining 4 Mtpa are ongoing.
The completed liquefaction facility is expected to be comprised of three liquefaction trains with a total export capability of 12 Mtpa of liquefied natural gas (LNG), or approximately 1.7 billion cubic feet (Bcf) per day. Construction on the project is expected to start in late 2013 with operations to commence in late 2016.
"These agreements with Mitsubishi and Mitsui represent a significant step forward in the development of a liquefaction facility at our Louisiana LNG terminal to support international natural gas markets," said Mark A. Snell, president of Sempra Energy.
The liquefaction facility will utilize Cameron LNG's existing facilities, including two marine berths capable of accommodating Q-Flex sized LNG ships, three LNG storage tanks of 480,000 cubic meters, and vaporization capability for regasification services of 1.5 Bcf per day. The anticipated incremental investment in the three-train liquefaction project is estimated to be $6 billion, the majority of which will be project-financed and the balance provided by the project partners in a joint-venture arrangement.
"We look forward to supporting Mitsubishi's and Mitsui's objectives to develop North American gas resources and deliver LNG to worldwide markets through a tolling arrangement at our facility," said Octavio M. Simoes, president of Sempra Energy's LNG operations.
In January 2012, Cameron LNG received approval from the U.S. Department of Energy (DOE) to export up to 12 Mtpa of domestically produced LNG from the Cameron LNG terminal to all current and future Free Trade Agreement countries. The authorization to export LNG to countries with which the U.S. does not have a Free Trade Agreement is pending review by the DOE. Cameron LNG expects to receive the required permits from the Federal Energy Regulatory Commission (FERC) and enter into a turnkey contract in 2013 for engineering and construction services for the project.
Cameron LNG has awarded an engineering services contract to Foster Wheeler AG (NASDAQ: FWLT) for project development, front-end engineering design to support permit applications to the FERC and support for engineering and construction contracting. Additionally, Cameron LNG has engaged the international law firm Morgan Lewis & Bockius LLP as legal counsel for the development of the liquefaction project and The Royal Bank of Scotland (LSE: RBS) as financial advisor for the liquefaction project.