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Mitsubishi, Mitsui Back $6 Billion Sempra Gas Terminal

Mitsubishi Corp. and Mitsui & Co. will help Sempra Energy develop a $6 billion natural-gas export facility in Louisiana, as Japan imports record amounts of the fuel.

Mitsubishi and Mitsui, both based in Tokyo, will help fund design, permitting and engineering work and in exchange will each get rights to a third of its export capacity for 20 years, San Diego-based Sempra said in a statement yesterday. The gas-liquefaction plant, capable of handling 1.7 billion cubic feet a day, will be part of Sempra’s existing import terminal in Hackberry, Louisiana.

A surge in North American production has caused gas futures in New York to drop to a 10-year low and spurred owners of liquefied natural gas import terminals to propose exports. Asian demand has climbed as Japan’s electric utilities bought record amounts of LNG last year to generate power, replacing nuclear output after last year’s Fukushima disaster shut all but one of the nation’s 54 reactors.

“These agreements with Mitsubishi and Mitsui represent a significant step forward in the development of a liquefaction facility at our Louisiana LNG terminal to support international natural-gas markets,” said Mark A. Snell, president of Sempra Energy.

The announcement follows the Federal Energy Regulatory Commission’s decision on April 16 to approve Cheniere Energy Inc.’s application to export gas from its facility. That project, estimated to cost $10 billion, will be located at an import terminal in Cameron Parish, Louisiana.

Gas Prices

Customers for the Cheniere project’s export capacity include Korea Gas Corp., Gas Natural Fenosa and BG Group Plc.

The amount Mitsui and Mitsubishi will invest in the export facility depends on financing arrangements yet to be determined, Doug Kline, a spokesman for Sempra, said in an e-mail. Sempra will retain 50 percent ownership, he said.

Gas futures fell to $1.951 per million British thermal units on the New York Mercantile Exchange yesterday, the lowest settlement price since Jan. 28, 2002. Japan paid as much as $20.87 per million British thermal units for LNG from Yemen in January, according to LNG Japan Corp.

To ship gas overseas by tanker, the fuel is cooled to minus 260 degrees Fahrenheit (minus 162 Celsius) causing it to condense and become a liquid.

Sempra’s facility may begin exporting gas in late 2016, pending regulatory approval and debt financing. The company is awaiting FERC approval and permission from the Energy Department to export the fuel to nations that don’t have free-trade agreements with the U.S.

Sempra rose 1.4 percent to $64.03 at the close in New York. Mitsui gained 0.3 percent to 1,275 yen and Mitsubishi fell 0.2 percent to 1,770 yen in Tokyo yesterday.

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