Today, Sempra LNG and IEnova sanctioned a new investment to build ECA LNG Phase 1, adding liquification-export capacity at the Energía Costa Azul (ECA) regasification terminal in Baja California, Mexico. In addition to the approximately $2 billion in capital expenditures for ECA LNG Phase 1, a roughly $400 million new pipeline in Mexico will be developed and owned by IEnova, leading to a total incremental investment across the Sempra family of companies of nearly $2.5 billion. Located approximately 70 miles south of San Diego, California, ECA LNG Phase 1 will be among the first U.S.-Mexico cross-border initiatives following implementation of the United States-Mexico-Canada Agreement.
Of note, ECA LNG Phase 1 is currently the only liquefied natural gas (LNG) export project globally to reach a final investment decision to date this year and is expected to be the first LNG-export terminal on the Pacific coast to connect the abundant natural gas supplies of the U.S. Western states, including Texas, Wyoming, Utah and New Mexico, to markets in Mexico and countries across the Pacific Basin. Phase 1 of the project is expected to create more than 10,000 direct and indirect jobs in the U.S. and Mexico with the full build-out of ECA LNG potentially creating three times as many jobs.
“Growing our LNG infrastructure to unlock a new outlet for U.S. natural gas producers is key to meeting the dual challenges of economic recovery and job creation in the U.S. and Mexico, while also accelerating the move to lower-carbon forms of energy worldwide,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy.
“Over the past two decades, the U.S has led the world in the reduction of CO2 emissions by committing to renewables and switching from coal to natural gas in power production. We believe that adding ECA LNG Phase 1 to our growing portfolio of strategic North American export facilities is critical to helping countries across the Pacific Rim to achieve similar CO2 reductions.”
ECA LNG has secured definitive 20-year sales and purchase agreements with Mitsui & Co., Ltd. and an affiliate of Total SE for the purchase of approximately 2.5 million tonnes per annum (Mtpa) of LNG from ECA LNG Phase 1. An affiliate of TechnipFMC plc, a world class engineering firm, was selected earlier this year to perform the engineering, procurement and construction of the Phase 1 facility.
ECA LNG Phase 1 marks Sempra LNG’s second LNG-export project to reach a final investment decision. Sempra LNG also owns a 50.2% interest in Cameron LNG, a 12 Mtpa export facility operating in Hackberry, Louisiana. Sempra LNG is also continuing to develop additional LNG export facilities on the Gulf Coast and Pacific Coast of North America through Cameron LNG expansion, Port Arthur LNG in Texas and ECA LNG expansion in Mexico.
For more than 20 years, Sempra Energy has established a track record of partnering with and empowering local communities in Mexico by providing jobs, access to cleaner, lower-cost energy supplies, and initiatives designed to improve the health, environment and economic security of Mexico. IEnova has been at the forefront of this work. IEnova’s assets serve families and businesses across Mexico with a view toward improving the country’s energy security and economic growth. The company is listed on the Mexican Stock Exchange.
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Factors, among others, that could cause our actual results and future actions to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: decisions, investigations, regulations, issuances of permits and other authorizations, and other actions by (i) the U.S. Department of Energy and other regulatory and governmental bodies and (ii) states, counties, cities and other jurisdictions in the U.S., Mexico and other countries in which we operate or do business; the success of business development efforts, construction projects and major acquisitions and divestitures, including risks in (i) the ability to make a final investment decision, (ii) completing construction projects on schedule and budget, (iii) the ability to realize anticipated benefits from any of these efforts once completed, and (iv) obtaining the consent of partners; the impact of the COVID-19 pandemic on our (i) ability to commence and complete capital and other projects and obtain regulatory approvals, (ii) supply chain and current and prospective counterparties, contractors, customers, employees and partners, (iii) liquidity, resulting from bill payment challenges experienced by our customers, decreased stability and accessibility of the capital markets and other factors, and (iv) ability to sustain operations and satisfy compliance requirements due to social distancing measures or if employee absenteeism were to increase significantly; the resolution of civil and criminal litigation, regulatory inquiries, investigations and proceedings, and arbitrations; actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook and our ability to borrow at favorable interest rates; moves to reduce or eliminate reliance on natural gas and the impact of the extreme volatility of oil prices on our businesses and development projects; weather, natural disasters, accidents, equipment failures, computer system outages and other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause fires and subject us to liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance (including costs in excess of applicable policy limits), may be disputed by insurers or may impact our ability to obtain satisfactory levels of affordable insurance; cybersecurity threats to storage and pipeline infrastructure, the information and systems used to operate our businesses, and the confidentiality of our proprietary information and the personal information of our customers and employees; expropriation of assets, the failure of foreign governments and state-owned entities to honor the terms of contracts, and property disputes; volatility in foreign currency exchange, interest and inflation rates and commodity prices and our ability to effectively hedge the risk of such volatility; changes in tax and trade policies, laws and regulations, including tariffs and revisions to or replacement of international trade agreements, such as the United States-Mexico-Canada Agreement, that may increase our costs or impair our ability to resolve trade disputes; and other uncertainties, some of which may be difficult to predict and are beyond our control.
These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on the company's website at www.sempra.com. Investors should not rely unduly on any forward-looking statements.
Sempra LNG, Cameron LNG, Port Arthur LNG and ECA LNG are not the same company as San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra LNG, Cameron LNG, Port Arthur LNG and ECA LNG are not regulated by the California Public Utilities Commission.