It’s been a strong summer for LNG project financing, with over 7.5 Bcf/d of projects reaching a final investment decision (FID) since the end of April. The latest is Sempra Energy’s (SRE) Port Arthur Phase 2, continuing a robust outlook for natural gas demand growth.
Last Tuesday (Sept. 23), Sempra announced FID on Port Arthur Phase 2 to build two additional liquefaction trains (13 Mtpa), doubling the capacity of Port Arthur LNG to just under 4 Bcf/d. Trains 1-2 are expected to begin service in 2027 and 2028, and Trains 3-4 are expected to start commercial operations in 2030 and 2031.
Phase 2 carries an estimated price tag of $12B, Sempra said, plus an additional $2B of Capex for “shared common facilities” to upgrade infrastructure at the Port Arthur facility. Funding for Phase 2 is supported by equity from a consortium of investors, including Blackstone Credit, KKR, Apollo, and Goldman Sachs Credit. The investor group together acquired a 49.9% minority stake in Phase 2 for $7B.
Rio Grande LNG also made FID on Rio Grande LNG Train 4 earlier this month, adding another 6 Mtpa. The Train 4 decision brings total FID’d capacity at the facility to 24 Mtpa, or over 3 Bcf/d of feedgas demand by 2030. TotalEnergies (TTE) holds a 17.1% stake in NextDecade (NEXT) and took an additional 10% stake in the joint venture to develop Train 4, along with partners Global Infrastructure Partners, GIC, and Mubadala. Venture Global (VG) made FID on Phase 1 of the CP2 LNG project at the end of July.
Historically, LNG facilities have reached FID once roughly 80% of the liquefaction capacity is contracted to counterparties. Increasingly this is no longer the case, as more outside investors are taking equity stakes in projects. Sempra reached FID on Port Arthur Phase 2 with just 56% of the capacity under contract, but expects to enter into additional offtake agreements. Woodside Energy’s (WDS) Louisiana LNG made FID at just 8% of contracted capacity after Stonepeak acquired a 40% stake in the project.
In total, East Daley Analytics forecasts 20.8 Bcf/d of incremental LNG feedgas capacity will be online by the end of the decade, on top of the 17.2 Bcf/d of current capacity. Our current estimate in the Macro Supply & Demand Report for total LNG feedgas demand is 34.2 Bcf/d by YE30, assuming 90% average utilization across all facilities (see figure above).
Many of the new facilities, including Port Arthur LNG, will be sourcing volumes from the Gillis hub in Louisiana. Gillis will have plenty of capacity in the short term as new lines like Williams’ (WMB) Louisiana Energy Gateway and Momentum Midstream’s NG3 rapidly fill to close out 2025, but projects will likely need additional capacity to reach FID in 2030 and beyond.
For a closer look at the Gillis supply and demand outlook, see East Daley’s Southeast Gulf S&D Report. – Oren Pilant Tickers: NEXT, SRE, VG, TTE, WDS, WMB.
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