Sempra Presses Forward on Texas T&D, Mexican Projects After Port Arthur LNG Setback
Researched by Industrial Info Resources (Sugar Land, Texas)--Utility-holding company Sempra Energy (NYSE:SRE) (San Diego, California) is upbeat about its 2021 prospects, despite having to push back a major decision on one of its highest-profile projects. Sempra executives point to the company's continued transmission and distribution (T&D) buildout in Texas and renewed investment in its Mexican operations. Industrial Info is tracking more than $32 billion worth of active projects from Sempra, with more than 90% of that amount attributed to projects currently in their planning phases, where plenty of factors could alter, delay or eliminate investment.
Sempra sees opportunities in Texas for T&D provider Oncor Electric Delivery Company LLC, which Sempra acquired in its 2018 buyout of Energy Future Holdings Corporation. Oncor is considering the proposed, 400-mile Southern Cross transmission line, which would connect a new substation on the Texas/Louisiana border with points across Louisiana and northeastern Mississippi. If approved, the project could begin construction in the fourth quarter of 2022, although Oncor and project manager Pattern Energy Group (NASDAQ:PEGI) (San Francisco, California) have faced years of permitting and site-selection hurdles. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a detailed project report.
The Lone Star State is adding power generation as it notches some of the strongest population growth in the U.S., and Oncor already is constructing a 15-mile, estimated $25.2 million transmission line from Abernathy to Lubbock, Texas, in an effort to improve T&D in the Panhandle. Subscribers can read more in Industrial Info's project report, and click below for details on the related:
- Upgrade to the 345-kilovolt (kV) component to the Abernathy Substation
- Upgrade to the 115-kV component to the Abernathy Substation
- Eight-mile transmission line within Lubbock
- Development of the North Substation in Lubbock
- Upgrade to the Northeast Substation in Lubbock
"In 2020, Oncor experienced its highest organic-premise growth ever and we're excited to see the growth continue this year," said Trevor Mihalik, the chief financial officer for Sempra, in a recent quarterly earnings-related conference call. "In the first quarter alone, Oncor connected approximately 19,000 new premises, greater than the connections in the first quarter of 2020."
But executives at Sempra recently conceded that the COVID-19 pandemic and other market-related factors likely will force the company to push back the final investment decision (FID) on its liquefied natural gas (LNG) plant in Port Arthur, Texas, from 2021 to 2022. The two-phase project is designed to produce more than 15 million metric tons per year of LNG. While one executive insisted in the earnings conference call that Sempra remains "bullish long term" on Port Arthur, the company's decision is just one part of a series of setbacks that have faced LNG projects across North America in the wake of the pandemic. Subscribers can read Industrial Info's detailed project reports for Train 1 and Train 2, and learn more about the broader issues for LNG in the May 25, 2021, article - After Woodside's Pullout from Canadian LNG Project, What North American Projects are Left?.
Also at risk is Sempra's proposed Louisiana Connector Pipeline Project, a multi-phase plan to transport natural gas from the Delhi, Louisiana, region to Port Arthur. The 86-mile Texas segment and 166-mile Louisiana segment were in the permitting process when the FID delay for the Port Arthur project was announced. Subscribers can read detailed project reports on the Texas and Louisiana segments.
Sempra's Hackberry Gas Storage Project in Cameron Parish, Louisiana, also hangs in the balance. The proposed terminal would provide about 26 billion cubic feet of natural gas storage capacity for the Port Arthur project via the Louisiana Connector Pipeline, as well as link to Sempra's Cameron Interstate Pipeline via a five-mile connection. Subscribers can read detailed project reports on the storage terminal and short connection.
Earlier this week, Sempra met one of its long-term goals when it acquired more than 95% of Mexican natural gas distributor IEnova (Mexico City, Mexico). Sempra had previously owned just more than 70%. IEnova is at work on Sempra's $1.9 billion Costa Azul LNG Export Terminal in Ensenada, Baja California, which achieved its FID in November and is expected to begin construction this summer, and the $150 million Energia Sierra Juarez Windfarm in La Rumorosa, Baja California, which began construction in early 2020 and is expected to generate 108 megawatts (MW). Subscribers can read detailed project reports on Costa Azul LNG and Energia Sierra Juarez.
Sempra's first-quarter earnings were reported to be $874 million, compared with $760 million in first-quarter 2020. Revenue stood at $3.26 billion, compared with $3.03 billion in the same period last year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.