Sempra Reconsiders Bechtel for Cameron LNG Expansion Project Amid Rising Costs

Sempra LNG is reevaluating its selection of Bechtel to build its Cameron LNG expansion project in Louisiana due to rising construction costs. The project faces delays and potential cost overruns amid industry-wide challenges and labor shortages.

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Aqsa Younas Rana
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Sempra Reconsiders Bechtel for Cameron LNG Expansion Project Amid Rising Costs

Sempra Reconsiders Bechtel for Cameron LNG Expansion Project Amid Rising Costs

Sempra LNG is reevaluating its selection of Bechtel to build its Cameron LNG expansion project in Louisiana due to rising construction costs. The decision comes amidst a broader increase in construction and labor costs affecting several U.S. liquefied natural gas (LNG) export projects under development.

Why this matters: The rising costs and delays in LNG export projects have significant implications for the global energy market, as the U.S. aims to increase its LNG export capacity to meet growing demand. This could lead to a shift in the global energy landscape, affecting trade balances and energy security.

The Cameron LNG Phase 2 project, a joint venture between Sempra LNG, TotalEnergies, Mitsui, and Japan LNG Investment LLC, aims to expand the capacity of the three trains at its 12 million metric tons per annum (MTPA) facility and add a fourth. Bechtel Corp's Bechtel Energy had built the first phase of the Cameron plant and is building the company's newest project, the Port Arthur LNG plant in Texas.

Sempra LNG CEO Justin Bird had previously mentioned working with Bechtel on value engineering, but did not mention the company in recent remarks on the Cameron expansion. "High demand for skilled labor for plant construction is causing costs to rise and making some projects too expensive to build," said a person familiar with the matter.

Paul Marsden, President of Bechtel Energy, acknowledged the industry-wide challenges, stating, "There's no doubt that the whole industry is feeling inflationary pressures. We need to actively forecast and manage labor availability and supply chain like never before."

Sempra had initially hoped to give the Cameron expansion project a financial greenlight in 2024 but pushed back the decision until the first half of 2025. The Golden Pass LNG joint venture in Louisiana also recently delayed its project startup into 2025 due to a dispute with one of its constructors.

The Cameron LNG plant, located in Louisiana, is the third-largest LNG export facility in the United States. Sempra LNG also operates facilities in Mexico and Texas. The expansion project is crucial for increasing the country's LNG export capacity, but the rising construction costs pose significant challenges to the project's timeline and budget.

As Sempra reconsiders its choice of Bechtel for the Cameron LNG expansion, the project faces delays and potential cost overruns. The dispute highlights the broader challenges facing the U.S. LNG industry as it seeks to expand export capacity in a high-cost environment.

Key Takeaways

  • Sempra LNG reevaluates Bechtel for Cameron LNG expansion due to rising construction costs.
  • Rising costs and delays affect multiple US LNG export projects, impacting global energy market.
  • Cameron LNG Phase 2 aims to expand capacity and add a fourth train to the facility.
  • High demand for skilled labor and supply chain issues drive up construction costs.
  • Sempra delays financial greenlight for Cameron expansion to 2025 due to cost concerns.