Freeport LNG has secured financing for two of three liquefaction trains, clearing the way for construction to begin on one of only a handful of natural gas export terminals authorized by federal regulators.
Now that the company has successfully closed on its financing commitments, crews can start work this week on the plant in Quintana, Texas. In a ceremonial groundbreaking earlier this month, CEO Michael Smith said he hoped to launch construction by Thanksgiving.
The privately owned company plans to pay for most of the project — about $8.4 billion — with loans borrowed from an array of Japanese banks. The remaining $2.54 billion will come from two Japanese firms — Osaka Gas Co. and Chubu Electric Power Co. — that previously contracted to buy the liquefied natural gas.
The first train should be operational by the third quarter of 2018. The second train should come online five months later.
Freeport LNG plans to announce financing for the third train in the second quarter of next year.
The debt and equity financing commitments add up to nearly $11 billion. That’s $1.36 billion more than the two trains are expected to cost, giving Freeport LNG a buffer for potential cost overruns, the company said.
At its peak, construction will generate more than 4,000 jobs. Once open, the plant will employ 300 full-time workers, the company said.
Freeport LNG received final approval from federal regulators earlier this month to export domestically produced liquefied natural gas to countries that do not have free trade agreements with the United States. Each train has a capacity to produce 4.64 million tons of LNG per year, with the first commercial exports expected to ship out in 2018.
The company has secured use-or-pay tolling arrangements with Osaka Gas, Chubu Electric, BP Energy Company, Toshiba Corp. and SK E&S LNG or 13.2 million tons per year.