TWIA Commercial Property & Casualty
$11.6B Golden Pass LNG developers ask for 3-year extension
Sep
Dive Brief:
- The developers of the $11.6 billion Golden Pass liquefied natural gas export project in Texas have filed for a three-year extension to complete construction, citing delays caused by the bankruptcy filing of the lead construction contractor, according to documents filed with the Federal Energy Regulatory Commission on Aug. 28.
- Former lead contractor Zachry Holdings filed for Chapter 11 bankruptcy protection in May, saying the megaproject was at least $2.4 billion over the original budget, causing it to hemorrhage money. The contractor has had years of disputes over costs, payments, layoffs and project delays with developer Golden Pass LNG Terminal LLC.
- Golden Pass LNG is made up of joint developers Qatar Energy and ExxonMobil, which respectively own a 70% and 30% stake in the methane gas project. They came to an agreement with San Antonio-based Zachry Holdings in July, allowing it to exit the project.
Dive Insight:
The developers requested an extension to build and place the facility into service by Nov. 30, 2029. The project was initially supposed to go into service in December 2021, and then got an extension to finish work by November 2026.
In the latest extension request filed with FERC, the developer said schedule uncertainties related to the transition to a new lead contractor mean the project needs more time, and cited “other possible delays outside of GPLNG’s control that may occur, such as potential hurricane impacts, and for commissioning and start-up activities, that additional time is required for completing construction of the project and placing it into service.”
The company aims to produce the first LNG around the end of 2025 with commercial operations following thereafter, a Golden Pass LNG spokesperson told Reuters, with additional time built in for contingencies.
The Golden Pass project is located in the Sabine Pass neighborhood of Port Arthur at the site of a former import terminal that was converted to process methane gas for export, according to Reuters. It has an annual export capacity of approximately 18 million tons.
The project was initially estimated to cost $9.25 billion in 2019 but skyrocketed 25% by August 2022 due to COVID-19 and geopolitical issues.
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