Golden Pass LNG owners QatarEnergy and ExxonMobil (XOM) have filed with a bankruptcy court to oust Zachry Holdings as the lead contractor for the project under construction. Bucking market talk of a settlement, the companies intend to take matters into their own hands to finish the job.
Zachry Holdings, the lead engineering, procurement and construction (EPC) contractor for Golden Pass LNG, filed for Chapter 11 bankruptcy protection in May. Zachry cited financial strain caused by “significant challenges and disruptions,” including the Covid-19 pandemic and recent geopolitical issues.
On June 18, Golden Pass LNG filed a request to remove Zachry from the project and allow the owners to take control of construction in order “to prevent further long-term deterioration” of the facility on the Sabine River, TX.
When Zachry filed for Chapter 11, many saw the move as a power play to force Golden Pass back to the negotiating table; finding a new EPC contractor would undoubtedly be more expensive and time-consuming. Zachry served as the lead contractor for project construction and was responsible for 52% of the total scope of work at Golden Pass.
After the latest filing, it’s clear Golden Pass has no intention of amending its EPC contract with Zachry. This latest uncertainty puts East Daley’s in-service date for Train 1 of July ’25 at risk in the Macro Supply and Demand Forecast.
Despite the setbacks, Golden Pass LNG has yet to revise the project schedule and says it is committed to completion. In a statement to a local Beaumont TV station, a spokesperson said work continues with the remaining EPC contractors McDermott and Chiyoda, with thousands of workers still at the site. Golden Pass LNG is 75% completed, the spokesperson said.
East Daley reviewed a potential delay at Golden Pass LNG earlier in May using the Macro Supply and Demand Forecast. We found a six-month delay would cut our Henry Hub forecast by ~$0.15/MMBtu through March ‘26. Despite the development, we remain bullish on the price outlook for 2025 as other new demand tightens the gas market. Even with a delay at Golden Pass, we expect prices to run up heading into next winter and average ~$3.75/MMBtu in 2025.
A delay at Golden Pass would remove ~219 Bcf of demand in the first half of 2025. Nevertheless, the demand outlook for gas remains strong in 2H24 and through 2025 with several other LNG projects planning to start, including Cheniere Energy’s (LNG) Corpus Christi Phase III project and Venture Global’s Plaquemines LNG. – Alex Gafford, Oren Pilant and Andrew Ware Tickers: XOM, LNG.
The Macro S&D is Now Selling Online!
The Macro Supply & Demand Forecast is now available for purchase. The Macro S&D takes a differentiated methodology using gas infrastructure to track production. Granular basin production helps build up a more accurate Macro price forecast. Move beyond daily samples and get ahead of the market. Purchase or learn more about the Macro S&D here.
Sign Up for the Crude Oil Edge
East Daley’s Crude Oil Edge provides weekly updates on the US crude oil market including supply and demand fundamentals, basin-level views, and analysis of market constraints and infrastructure proposals. We explore sub-basin dynamics and provide market insights on crude oil flows, production growth, and import and export characteristics. Sign up now for the Crude Oil Edge.
Energy Data Studio
East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.
Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.
Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact insight@eastdaley.com.
The Daley Note
Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.
East Daley's Upcoming Product Releases:
Natural Gas
- Weekly Midstream Activity Tracker: Wednesday, July 3rd
Crude
- Crude Hub Model: Tuesday, July 2nd
- Crude Oil Edge: Wednesday, July 3rd
- Bakken-GSNY-DJ, and Permian S&D: Wednesday, July 3rd
Natural Gas Liquids
- Network Hub Model: Monday, July 1st
- Ethane Supply and Demand: Monday, July 1st
- Propane Supply and Demand: Tuesday, July 2nd
Capital Intelligence
- AM, ENLC, SMLP, TRGP, and GEL Financial Model and Previews: Tuesday, July 2nd
