Sempra Energy LNG Receiving Terminals, USA / Mexico

Sempra Energy, a US energy services company, is constructing some of the largest LNG associated capital projects in North America. LNG is set to be one of the major fuels of the future worldwide, particularly in the energy-hungry North American continent.

Sempra Energy as its subsidiary Sempra LNG is putting in place the facilities and infrastructure necessary to exploit the new demands for LNG, which will be seen in the coming years.

Sempra LNG announced the award of engineering, procurement and construction (EPC) contracts worth in excess of $1.2bn in January 2005.

These are for two new LNG receiving terminals: the Energia Costa Azul receiving terminal, 14 miles north of Ensenada in Baja California, Mexico; and the Cameron receiving terminal, which is 15 miles south of Lake Charles on the Gulf of Mexico coast in Louisiana.

Mexico – Energia Costa Azul receiving terminal

A consortium comprising Techint SA de CV of Mexico, Black & Veatch of Kansas City, Mitsubishi Heavy Industries of Tokyo and Vinci Construction Grands Projects of France (BMVT) was awarded the $500m EPC contract for the Energia Costa Azul receiving terminal (phase I). This part of the project, completed in 2008, gave the terminal a capacity of one billion cubic feet per day.

Phase II work (planned in 2006) included a new south jetty, unloading facilities and the expansion of the LNG storage tanks, regasification facilities and harbour tug facilities (Halcrow provided the FEED design for the marine structures and harbour tug facilities).

In October 2007 the Mexican energy regulator CRE approved the capacity expansion at the Costa Azul terminal to 2.7 billion cubic feet per day.

Work on this has started, but relies on pipeline expansions (North Baja pipeline expansion) to be completed prior to its capacity being run into the US gas grid.

In addition an EPC and start-up contract was granted to ICA Fluor, a subsidiary of Fluor Corporation and Empresas ICA, SAB de CV (March 2008) for $100m to construct a nitrogen injection plant and a power generation facility at the 400 acre LNG terminal site. This was completed and put into service in December 2009, and provides 18 million cubic feet per day of nitrogen gas to help transport LNG to US standards. The power plant provides a capacity of 26MW in addition to the existing generating capacity.

A joint venture involving Costain Group of London, UK, and China Harbour of China won the construction contract for the project’s $170m breakwater. The breakwater, which is 1,300m long, was designed by Scott Wilson and integrates two sizes of concrete caisson (these are 46m long and 68m long, and 25.5m high and 38m wide) weighing more than 90,000t each to provide protection against a one in 1,000 year wave (9.2m to 17m maximum).

The port and berthing facilities along with ship-to-ship technology were developed by Arup in conjunction with Baird of Canada and FMC (navigation simulation studies).

The Mexico project opened on 28 August 2008 and has the capacity to process one billion cubic feet of natural gas per day. Work on the access road to the project site was completed and construction of the terminal started in April 2005. At the peak of construction, in 2007, Energia Costa Azul had as many as 1,500 workers on site. The terminal can accommodate LNG carriers ranging from 75,000m³ to 200,000m³ capacity and received its third load of LNG amounting to 150,000m³ from Trinidad in September 2008.

USA – Cameron receiving terminal

The EPC contracts for the Cameron LNG receiving terminal (previously known as the Hackberry LNG terminal, but the site was bought from Dynergy in February 2003 for $20m) were also awarded. The project was worth an estimated $750m.

The contract was awarded to a consortium consisting of Aker Kvaerner of Norway and Tokyo-based Ishikawajima-Harima Heavy Industries (AK / IHI).

Aker Kvaerner has a great deal of expertise in the engineering and construction of LNG receiving terminals, while Ishikawajima-Harima Heavy Industries is a leader in the design and manufacturing of LNG storage and processing systems.

The engineering and design work for the project was undertaken from the companies’ Houston offices. Construction started in September 2005 following the completion of Sempra LNG’s supply arrangements for the facility.

The Cameron LNG terminal on the Calcasieu Channel commenced commercial operations in October 2009 and is capable of processing 1.5 billion cubic feet per day of natural gas. Cameron is the first new LNG facility in the US to receive a permit from the Federal Energy Regulatory Commission in more than 20 years. Cameron LNG’s construction workforce reached a peak at 800 in 2007.

The terminal is located just 35 miles from a pipeline junction that can access 65% of the US mains gas market. The facility includes three full containment LNG storage tanks (160,000m³), two berthing areas (north and south) and an unloading infrastructure consisting of multiple loading arms, air compressors and submerged combustion vaporisers.

New LNG receiving terminals

Sempra Energy’s Cameron and Energia Costa Azul LNG terminals serve two key North American energy gateways: the US Gulf Coast region and the west coast of Baja California, Mexico. Combined, the two projects process up to 2.5 billion cubic feet of natural gas per day.

A further proposed Sempra LNG receipt terminal project in Port Arthur, Texas, was approved in 2006. Construction on the Port Arthur LNG project was expected to begin in 2006 with operations commencing in 2009 but this was delayed because of environmental and permit issues.

As of April 2012, the project is still on hold due to uncertainties in securing LNG supplies. Sempra is also believed to be considering development of a floating LNG (FLNG) solution at Port Arthur instead of land based liquefaction facilities. The project is expected to cost $1bn and begin in late 2015 or 2016.

Supply contracts

Sempra LNG was awarded a 15-year natural gas supply contract by Mexico’s state-owned electric utility Commission Federal de Electricidad (CFE). The contract is estimated at $1.4bn over its life and supports CFE’s future energy requirements in northern Baja California, including the Presidente Juarez power plant in Rosarito. The gas is supplied via the Energia Costa Azul LNG terminal.

The contract began in 2008 and will continue through to 2022. The agreement provides CFE with an average of about 130 million cubic feet per day of natural gas. The CFE contract will consume more than one quarter of the 500 million cubic feet per day Sempra LNG is procuring from Indonesia. Sempra LNG set up an LNG supply agreement in October 2004 with BP and its Tanguh LNG partners for the supply of 3.7 million tonnes of LNG per year (500 million cubic feet per day) from Indonesia to Energia Costa Azul.

Sempra LNG also signed in October 2004 a 20-year agreement to provide Shell International Gas with half of the Energia Costa Azul facility’s processing capacity (500 million cubic feet per day); because as the plant expands, Shell’s share of the processing capacity will increase in proportion. The LNG for the Shell processing at Energia Costa Azul will come from the Sakhalin II project in Eastern Russia (Shell is a major shareholder).

Pipelines and storage facilities

Sempra Pipelines & Storage, a unit of Sempra Energy, has constructed and will operate the Liberty Gas Storage natural gas storage facility in Calcasieu Parish, Louisiana. The company received final authorisation from the Federal Energy Regulatory Commission (FERC) to operate the facility under Section 7(c) of the Natural Gas Act in August 2005.

Liberty Gas Storage is located near the town of Sulphur, Louisiana, and provides firm storage and related services to customers transporting natural gas on various interstate pipelines in the region. The facility provides 17 billion cubic feet of working gas capacity for storage (salt caverns) and came into service in the second quarter of 2006.

The project includes surface facilities to allow for a maximum injection of 500 million cubic feet per day and maximum withdrawals of one billion cubic feet per day.

Liberty Gas Storage is located near the Cameron pipeline connecting the LNG re-gasification terminals to the interstate gas transmission system (six pipelines). The project includes 24,000hp of compression (Ragley compressor station and the Brimstone compressor station) to assist in the injection and withdrawal of gas and a bidirectional 30in pipeline.

Sempra Pipelines & Storage acquired the rights to develop the gas storage facility from HNG Storage in June 2004. Liberty Gas Storage is a 17 billion cubic feet per day high-deliverability salt-cavern natural gas storage facility. The project has access to over eight billion cubic feet per day of interstate pipeline capacity linked to multiple markets and is adjacent to significant industrial loads that have been under increasing pressure to stabilise their natural gas costs.