Called Vista Pacifico, the development would send natural gas to markets in Asia.
Sempra already has one liquefied natural gas export project underway in Mexico and on Friday, the San Diego-based energy and infrastructure company announced specifics about plans to build another.
The project is called Vista Pacifico LNG and, if constructed, the facility would concentrate on sending liquefied natural gas, or LNG, cargoes from Topolobampo, a port city on the Gulf of California in the state of Sinaloa, primarily to markets in Asia.
The proposed facility has been part of a two-way discussion with officials in the Mexican government for about a year. If built, it would be located next to a large refined products terminal owned by Sempra Infrastructure, one of the company’s subsidiaries.
It’s estimated Vista Pacifico LNG would export about 4 million metric tons of LNG per year.
That would be about the same amount that the Energía Costa Azul facility is expected to export. The facility near Ensenada that Sempra Infrastructure operates is being expanded to ship LNG cargoes across the Pacific. Production and shipments are scheduled to start by the end of 2024.
LNG exports coming from Energía Costa Azul, known as ECA for short, are expected to draw considerable interest because its location directly on the Pacific means shipments can bypass paying tolls at the Panama Canal and arrive in Pacific Rim destinations in about half the time it takes LNG exports originating from facilities located on the Gulf Coast to arrive.
Sempra officials see a similar pattern for Vista Pacifico.
“It’s still in the early stages of design and development,” said Brian Lloyd, regional vice president for Sempra Infrastructure. “We’re pretty optimistic that based on our experience at ECA that we’ll have plenty of people very interested in this project, if we can develop it in a way to make an acceptable return.”
Vista Pacifico is still a few years out and needs to receive an additional permit from the U.S. Department of Energy, as well as at least two permits from the Mexican government. However, President Andrés Manuel López Obrador last year floated the idea of having Sempra assist his government in reducing stocks of excess natural gas.
“We made the decision several years ago that what we really want to do is help president López Obrador be successful,” Sempra CEO Jeff Martin said Friday on an earnings call with Wall Street analysts. “So the majority of our conversations are focused on ways that we can partner with his cabinet to make Pemex (Mexico’s state-owned petroleum company) be successful and make CFE (the state-owned electric utility) successful.
“So when you see announced projects like this at Pacifico it’s because those will be done largely in tandem with the objectives of the government.”
The natural gas at the Vista Pacifico project would originate from the Permian Basin in the U.S. and come to the facility via two already existing pipelines, one of which Sempra Infrastructure already owns. While Asian markets would be the primary destination, Lloyd said cargoes could also go to South America or stay in Mexico.
LNG export facilities take natural gas via pipeline, cool it to minus-260 degrees Fahrenheit, load the liquefied product onto specially made cargo tanks on double-hulled ships that take the LNG to markets around the world, many of which want to replace coal with natural gas.
Since natural gas burns about twice as clean as coal, supporters of LNG say it’s an effective and environmentally friendlier option. But most environmental groups oppose the trade, saying it extends the use of fossil fuels.
“We do not want to export our bad ideas,” an attorney with the Natural Resources Defense Council told the Los Angeles Times earlier this year. “If we are recognizing that gas is not a long-term climate solution, we shouldn’t be aggressively spreading gas infrastructure across the globe.”
Sempra is one of the major players in the LNG export sector.
In addition to ECA, the company has a majority ownership in Cameron LNG, a $10 billion facility that opened in 2019 on the Louisiana Gulf Coast. Cameron expects to expand production to a fourth train by the end of next year. Sempra also has long contemplated building a sizable LNG export facility near Port Arthur, Texas.
The LNG market has seen a recent uptick in long-term contracts and pricing, in large part due to energy crunches in the European Union and China, where natural gas supplies have run short.
“We think we have a competitive advantage, the ability to dispatch directly into Europe and Asia,” Sempra Infrastructure CEO Justin Bird said during the earnings call, citing projections of LNG demand “growing mid-to-high-single digits, which supports our long-term, very bullish view on LNG development.”