New Fortress Energy Inc. (NFE) said the work necessary to begin operations at its LNG unit offshore Altamira, Mexico, is nearly complete with first production seen within two weeks.
The company added in an update that the fast liquefied natural gas (FLNG) facility would be able to begin production in 10 days with the first cargo set for July.
The project, which would be the first export facility to ship natural gas from Mexico to global markets, has seen months of delays. CFO Chris Guinta in the quarterly earnings call said a late April malfunction with the FLNG facility’s cold box resulted in some minor injuries.
Crews last summer began installing the floating modules offshore the state of Tamaulipas. The first phase of the export project consists of two trains, each with 1.4 million metric tons/year (mmty) of capacity, hoisted on jack-up rigs.
Feed gas for the project is to be supplied by the marketing arm of Mexico’s Comisión Federal de Electricidad (CFE), CFEnergía. Gas would be supplied from the Agua Dulce Hub in South Texas via the Valley Crossing pipeline and then the Sur de Texas-Tuxpan undersea pipeline.
NGI’s Patrick Rau, senior vice president of Research & Analysis, said despite the delays, the NFE project would “end up being just a bit more than three years to get that project in-service, versus the five-plus it typically takes for larger, land-based structures. NFE would be able to apply lessons learned from its first foray to its other planned FLNG projects.”
NFE has outlined plans for at least five FLNG units so far, each with a design capacity of 1.4 mmty. Another unit is under construction at a South Texas shipyard.
Once the facility is operational, NFE expects to begin selling cargoes to its existing customers in the Caribbean and South America via its U.S. Department of Energy (DOE) free trade agreement (FTA) permit.
Altamira is one of at least seven commercially advanced projects in the United States and Mexico with a pending application for a non-FTA permit. They are currently impacted by the DOE’s pause on new permit authorizations.
The projects impacted by the pause amount to a combined 9.3 Bcf/d in export capacity under risk, according to an NGI review of pending projects.
Non-FTA permits are typically considered essential for large-scale export projects.
Earlier this year, U.S. Customs and Border Protection issued a ruling that the transportation of LNG produced offshore Altamira by non-U.S. qualified vessels would not violate the Jones Act. This would allow NFE to ship volumes from the facility to U.S. territories such as Puerto Rico, or even the continental United States.
Mexico has about 7.5 mmty of LNG capacity under construction, according to NGI’s North American LNG Project Tracker. Most of the facilities are expected to use U.S. feed gas. Sempra’s Energia Costa Azul LNG project in Mexico’s Baja California is set to come online next year.
The projects would only add to Mexican demand for U.S. gas, which has averaged all-time highs so far in June at around 7.2 Bcf/d. U.S. natural gas imports have accounted for more than 70% of Mexico’s market needs so far this year, according to Wood Mackenzie.
