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