ConocoPhillips, Sempra sign HOA for LNG, CCS activities

ConocoPhillips and Sempra Infrastructure signed a heads of agreement (HoA) for large-scale LNG projects and carbon capture activities.

Pursuant to the HoA, ConocoPhillips would acquire a 30% direct equity holding in Port Arthur Liquefaction Holdings LLC and an LNG offtake equivalent of about 5 million tonnes/year (tpy) from the Port Arthur LNG project in Jefferson County, Tex., ConocoPhillips said in a release July 14.

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

Sempra Infrastructure and Bechtel are working on updating the terms of the project's fixed-price engineering, procurement, and construction contract. Under the terms of the HoA, ConocoPhillips will supply the gas for its 5 million tpy offtake and may provide additional gas supply services to the liquefaction plant. In addition, ConocoPhillips will have the option to acquire certain LNG offtake and equity ownership from future contemplated LNG trains at the Port Arthur LNG site, where a similarly sized Phase 2 project is also under development, Sempra said in a separate release July 14. 

Carbon capture 

The companies also will evaluate development of low-carbon projects, including a carbon capture and storage (CCS) project for the Port Arthur LNG plant, and 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.

The HoA also provides an opportunity for ConocoPhillips to acquire offtake and equity participation in Sempra’s development of the Energia Costa Azul (ECA) LNG Phase 2 project to be sited north of Ensenada, Baja California, Mexico. 

The ECA LNG Phase 2 liquefaction export project is in early-stage development by Sempra Infrastructure, Sempra said. ECA LNG Phase 1 is currently under construction with first production of LNG by the 3.25-million tpy plant expected by end 2024.

The HoA is a preliminary, non-binding arrangement, and the development of Sempra Infrastructure's LNG projects remains subject to a number of risks and uncertainties, including reaching definitive agreements, securing all necessary permits, signing engineering and construction contracts, obtaining financing and incentives and reaching a final investment decision for each project.