Zachry Group, one of the construction firms working on the Golden Pass LNG terminal, disclosed it will eventually exit the project and has filed for bankruptcy amid reported financial and labor issues.
The San Antonio-based engineering, procurement and construction (EPC) firm is the lead contractor in charge of staffing construction activities for the 18 million metric tons/year (mmty) Golden Pass liquefied natural gas export project. Earlier in the month, a Golden Pass LNG spokesperson told NGI that the EPC joint venture partners, which include Chiyoda Corp. and McDermott, were in “ongoing discussions regarding the role of Zachry” after reported furloughs of workers from the site southeast of Houston.
CEO John Zachry said the challenge of keeping Golden Pass construction on track while navigating inflationary impacts from the Covid-19 pandemic and geopolitical issues caused “significant financial strain” for the private firm.
“We have been transparent with [Golden Pass] and its shareholders as we have attempted to reach a mutually agreeable resolution to these issues,” Zachry said. “Because we have been unable to find a path forward, we have been forced to take action to protect our business.”
Zachry added the bankruptcy process should provide the company “with time and flexibility to resolve issues related to the Golden Pass LNG” project. He also said construction activities are expected to continue at the company’s other contracted worksites while the bankruptcy proceedings are ongoing.
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 for the construction of the 13 mmty first phase of the facility.
Speculation of possible labor and construction issues at Golden Pass have been mounting as the market weighs the risk of the first LNG being pushed back into the latter half of 2025. The company, a joint venture between ExxonMobil and QatarEnergy, filed a revised commissioning schedule at the Federal Energy Regulatory Commission earlier in the month, which was not published publicly.
“Golden Pass LNG acknowledges the bankruptcy filing by Zachry Industrial, Inc., a party to the EPC contract for construction of our LNG terminal,” a project spokesperson told NGI Tuesday. “Work continues on the project with McDermott and Chiyoda, the other two parties to the EPC contract, with thousands of workers on site. The project is already 75% progressed and we are committed to completing the project.”
Chiyoda has postponed the publication of its full-year earnings results previously scheduled earlier in the month, citing the need to gather information about an impacted project. The company did not specify what kind of project it was examining. Chiyoda is also involved in several other LNG projects internationally and in North America, including LNG Canada in British Columbia.
If a reshuffling of the EPC joint venture leads to delays, it would be the second time in less than a year that the Golden Pass LNG timeline has shifted. ExxonMobil reported late last year exports would begin in the first half of 2025 instead of 2024, as the partners had long signaled.
