Williams signs nonbinding supply deal for LNG from Sempra export projects in US

U.S. midstream giant Williams Cos. Inc. will buy a total 3 million tonnes per year of liquefied natural gas tied to Sempra's proposed Cameron LNG terminal expansion and Port Arthur LNG facility.

The nonbinding heads of agreement, announced Nov. 15, included a separate long-term supply agreement for about 0.5 Bcf/d of gas delivered near Gillis, La. Williams and Sempra said they planned to form a joint venture to expand and operate the Cameron interstate pipeline, which is expected to deliver gas to the Cameron LNG expansion in Hackberry, La.

Sempra expects to advance the 10-Mt/y Port Arthur LNG plant to construction in the first quarter of 2023 after months of negotiations over preliminary deals that the company signed to advance its LNG growth ambitions, the company said on a Nov. 3 earnings call. Sempra executives also described the recent refresh of a contract with Bechtel Energy Inc. as a critical milestone before a final investment decision on the project. The engineering, procurement and construction services contract calls for Bechtel to build the first phase of Port Arthur for an estimated $10.5 billion.

Port Arthur's construction will likely take 50-55 months after the project is commercially sanctioned, Sempra said.

Sempra plans to commercially sanction the single-train, 6.75-Mt/y expansion of the Cameron LNG terminal as soon as summer 2023, after it completes an engineering design study and gets a critical permit from federal energy regulators.

Pipeline support for LNG activity

Williams touted the deal as supporting its Louisiana Energy Gateway gas gathering project, which it recently commercially sanctioned, and connections to pipelines serving Sempra LNG facilities.

U.S. midstream companies have been emphasizing their exposure to the international LNG market on the back of rising expectations that commercial momentum tied to U.S. LNG projects has bolstered the prospects of new export capacity.

Gas exports for Europe

A significant amount of Sempra's commercial activity in 2022 has involved European gas buyers as Europe works to secure alternatives to Russian gas following Russia's invasion of Ukraine. The company has signed a 20-year agreement with Switzerland's INEOS AG for 1.4 Mt/y of LNG from Port Arthur or from the second phase of its Cameron project; another 20-year deal that would see Poland's state-controlled Polskie Górnictwo Naftowe i Gazownictwo SA take 2 Mt/y from the Cameron expansion project and 1 Mt/y from Port Arthur; and a 15-year deal for German company RWE AG to take 2.25 Mt/y from Port Arthur.

Sempra also announced preliminary deals with portfolio players tied to more than 9 Mt/y, including a July agreement with ConocoPhillips to jointly develop Port Arthur and to negotiate a 5-Mt/y off-take deal.

Sempra's top priority among its LNG projects has been building its $2 billion Energía Costa Azul terminal on the west coast of Mexico on time and on budget. The company expects the 2.5-Mt/y facility to start producing LNG in 2024.