Could U.S.-funded deal help launch West Coast LNG ex­port project in Mex­ico?

Tehran Times - - ENERGY -

A West Coast LNG ex­port fa­cil­ity south of Cal­i­for­nia could get a boost if dis­cus­sions un­der­way re­sult in par­tial U.S. gov­ern­ment fund­ing us­ing new le­gal au­thor­i­ties.

The Depart­ment of En­ergy is work­ing with the Mex­i­can gov­ern­ment and is in dis­cus­sions with the Over­seas Pri­vate In­vest­ment Cor­po­ra­tion about the pos­si­bil­ity of fund­ing such a fa­cil­ity for ex­ports of gas, and pos­si­bly coal, a top DOE of­fi­cial said Tues­day. The project would con­nect to U.S. gas sup­plies by pipe­line.

The ef­fort comes as the Trump ad­min­is­tra­tion has steadily pro­moted U.S. LNG ex­ports as part of a broader en­ergy, se­cu­rity and trade pol­icy. LNG ex­ports are seen as a key source of de­mand growth for the U.S. nat­u­ral gas sec­tor.

En­act­ment in early Oc­to­ber of the BUILD Act will al­low a re­vamped ver­sion of the Over­seas Pri­vate In­vest­ment Cor­po­ra­tion to sup­port projects with eq­uity as well as debt and to dou­ble its to­tal out­put. U.S. of­fi­cials have de­scribed the law as help­ing spur pri­vate-sec­tor devel­op­ment with the ben­e­fit of en­cour­ag­ing fa­cil­i­ties to re­ceive U.S. LNG.

“We’re go­ing to be putting to­gether a list of po­ten­tial projects that we would like to see OPIC con­sider,” said DOE Deputy Sec­re­tary Dan Brouil­lette, in an in­ter­view with sev­eral re­porters. “The no­tion of al­low­ing this new or­ga­ni­za­tion to take an eq­uity po­si­tion as well as a debt po­si­tion I think fun­da­men­tally changes the types of projects that we might be able to en­cour­age. To­gether [with OPIC] we’re go­ing to work on a list.”

DOE did not spec­ify which projects it is con­sid­er­ing in Mex­ico.

One project in the Mex­i­can state of Baja Cal­i­for­nia is En­er­gia Costa Azul, where Sem­pra En­ergy sub­sidiary IEnova has been ex­plor­ing op­tions for multi-phase devel­op­ment of an ex­port ter­mi­nal. The ex­ist­ing ECA LNG im­port ter­mi­nal can re­ceive up to 1 Bcf/d and the com­pany has said the trans­formed project could have an ex­port ca­pac­ity of up to 2 Bcf/d. IEnova, dur­ing its Q3 earn­ings call, said it has enough cash flow to fi­nance re­con­fig­u­ra­tion of the ter­mi­nal at a smaller scale. To de­velop the fa­cil­ity to its max­i­mum ca­pac­ity, IEnova has said it will need a part­ner.

Brouil­lette high­lighted other ef­forts to sup­port West Coast ex­ports of U.S. LNG, such as en­cour­ag­ing the U.S. Fed­eral En­ergy Reg­u­la­tory Com­mis­sion to con­tinue its re­view of pend­ing projects. “We’d like to like to see them com­plete those and move for­ward one way or the other so that we can get a de­ci­sion.”

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