Photo: Port Arthur LNG facility; Courtesy of Port Arthur LNG

ConocoPhillips to invest in Port Arthur LNG facility

U.S. oil major ConocoPhillips and compatriot infrastructure company Sempra have signed heads of agreement (HOA) for large-scale LNG projects and carbon capture activities.

ConocoPhillips to invest in new LNG facility by Sempra Infrastructure
Port Arthur LNG facility; Courtesy of Port Arthur LNG

On 14 July, ConocoPhillips announced an investment in a new large-scale LNG facility under development by Sempra Infrastructure, a subsidiary of Sempra. The facility will be located in Jefferson County, Texas.

Specifically, ConocoPhillips entered into an HOA with Sempra to acquire a 30 per cent direct equity holding in Port Arthur Liquefaction Holdings, and an LNG offtake equivalent to approximately five million tonnes per annum (mtpa) from the Port Arthur LNG project.

The first phase of the project is fully permitted and expected to include two liquefaction trains and LNG storage tanks, as well as associated facilities capable of producing up to approximately 13.5 mtpa of LNG.

Under the terms of the HOA, ConocoPhillips will supply the gas for its five mtpa offtake and may provide additional gas supply services to the Port Arthur LNG facility. In addition, it will have the option to acquire certain LNG offtake and equity ownership from future LNG trains at the Port Arthur LNG site, where a similarly sized Phase 2 project is also under development.

Ryan Lance CEO, said: “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.”

The companies will also evaluate the development of low-carbon projects, including a carbon capture and storage (CCS) project for the Port Arthur LNG facility. Sempra Infrastructure would have the opportunity to participate in carbon capture and sequestration projects developed by ConocoPhillips in Texas or Louisiana in connection with the Port Arthur LNG project.

Additionally, the HOA provides an opportunity for ConocoPhillips to acquire offtake and equity participation in Sempra’s development of the Energia Costa Azul LNG Phase 2 project north of Ensenada, Baja California, Mexico.

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

“This HOA aligns with our Triple Mandate, the objectives of which are to reliably and responsibly deliver production to meet energy transition pathway demand, deliver competitive returns on and of capital to our shareholders, and achieve our Paris-aligned targets and 2050 net-zero operational emissions ambition,” added Lance. “We are now positioned among the largest natural gas producers in the U.S. through our recent acquisitions of Concho and Shell’s Permian assets and are interested in expanding our LNG presence. Equity ownership in the Port Arthur LNG project would allow ConocoPhillips to participate in future expansions and lower-carbon activities in line with our own strategic initiatives.”

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ConocoPhillips said it will leverage existing strengths in natural gas marketing and trading and emissions reduction projects in support of the Port Arthur LNG project as well as its growing global LNG portfolio. That portfolio includes the recent announcements of the company increasing its equity share in Australia Pacific LNG to 47.5 per cent and selection as a partner in the North Field East Project in Qatar.