Golden Pass LNG Terminal LLC and its primary contractors, including Zachry Industrial Inc., have agreed to a settlement that could jumpstart construction again at the Texas LNG facility.
In a filing Monday, San Antonio, TX-based Zachry requested that the U.S. Bankruptcy Court for the Southern District of Texas accept the proposed agreement at a hearing scheduled for Wednesday.
Along with structuring the release of around $213 million in contested costs, Zachry agreed to exit the liquefied natural gas export project and turn over equipment and work to engineering, procurement and construction (EPC) partners Chiyoda Corp. and McDermott.
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“Importantly, the settlement will facilitate the completion” of Golden Pass and “create a path” allowing Zachry to emerge from bankruptcy, the request noted.
As part of the agreement, if accepted, Golden Pass would be responsible for making payments to vendors working on the project.
Zachry filed for bankruptcy in May. It claimed that as lead EPC contractor in charge of staffing construction activities for the 18 million metric tons/year (mmty) project, it faced “significant financial strain” while keeping the project on track in the face of impacts from the Covid-19 pandemic and resulting inflation.
Also in May, Zachry fired about 4,400 people assigned to the project. Golden Pass in a court filing said the decision delivered a major impact to the project. At the end of June, Golden Pass asked the court to immediately remove Zachry from the EPC contract, accusing it of further stalling the process while fighting over funds it claimed it was owed.
Zachry is also an EPC partner for Venture Global LNG Inc.’s Plaquemines LNG project in Louisiana. It formed a joint venture with engineering firm KBR Inc. in 2021 to construct the 13 mmty first phase of the facility.
The market has honed in on indications that Golden Pass could be delayed. Each of the three trains at Golden Pass in Southeast Texas could add around 700 MMcf/d in feed gas demand, according to NGI calculations.
In June, Golden Pass estimated the first train was 83% complete and, with a full workforce, it could be ready by mid-2025. At peak construction, more than 7,000 people were expected to be working on the project.
