KEY POINTS
- FERC grants a three-year extension to the project.
- Zachry Holdings files bankruptcy, causing construction delays.
- New contractor negotiations underway with McDermott International.
A joint venture between ExxonMobil and Qatar Energy was given a three-year extension by federal regulators on Thursday to finish the Golden Pass LNG plant, a major facility being built in the U.S. Gulf Coast.
Bankruptcy and delays force timeline adjustments at Golden Pass
The extension gives the venture more time because of building delays after Zachry Holdings, the project’s main contractor, filed for bankruptcy, according to a Federal Energy Regulatory Commission (FERC) filing.
Golden Pass LNG, which is situated in Sabine Pass, Texas, was once scheduled to start operations shortly. Its output was anticipated to make a substantial contribution to the U.S. LNG export capacity. Once a gas import facility, the location was transformed to handle LNG exports, which entail supercooling natural gas for transportation. It is one of two sizable U.S. LNG facilities that are expected to contribute to the growing demand for LNG worldwide, particularly as Asian and European markets look for new LNG suppliers.
Zachry Holdings filed for Chapter 11 bankruptcy protection earlier this year due to the joint venture, GPX, which suffered from major delays and cost overruns. Zachry disclosed in bankruptcy court documents that the project’s budget had exceeded original projections by at least $2.4 billion. Regulators approved the extension to give the enterprise more time to find alternate construction alternatives because the financial pressures and restructuring requirements had affected the venture’s schedules.
McDermott International in talks to lead project
According to Reuters, talks are still underway with McDermott International, which may take over as the primary contractor, Golden Pass LNG has not yet announced a new engineering, procurement, and construction (EPC) contractor. The project would probably benefit from McDermott’s vast experience with large-scale LNG infrastructure if it were to take over. However, talks are still going on and no formal agreement has been made.
Golden Pass’s extension is viewed as a step in the right direction for the US LNG industry, which has experienced budget changes and delays in a number of significant projects. Once Golden Pass LNG is up and running, it should significantly increase the country’s export output and solidify America’s position as the world’s top LNG exporter.
As Europe shifts away from its reliance on Russian natural gas, the plant is anticipated to be crucial in maintaining supply balance to fulfill the growing demand for cleaner energy sources worldwide.
