Massive Freeport LNG project chugs forward with $12.5 billion in its back pocket

Freeport LNG has secured the final piece of financing for its $12.5 billion liquefied natural gas export terminal, placing the company on track to begin producing within three years.

The company had already financed two of the three proposed production facilities, called trains. On Tuesday, Freeport LNG announced that it has closed on $4.56 billion in debt financing commitments to pay for the third train. Most of the debt will come from a syndicate of 27 commercial banks, although the company also plans to pay for some of the project using mezzanine financing, an arrangement that allows lenders to claim a stake in the company if the loan isn’t paid back on time.

Related: Freeport LNG secures financing, clears way for construction

The first two trains have been under construction since the fall, when the company announced that it had been cleared by federal regulators to start work. Tuesday’s announcement allows Freeport LNG to begin full construction of the project, which has been nearly five years in the making, CEO Michael S. Smith said in a statement.

“We are excited to achieve this next great milestone in the advancement of the Freeport LNG liquefaction project,” he said.

The company expects to produce its first batch of LNG by early 2018. Commercial operations of the first train are expected later that year, with the facility fully operational by the end of 2019.

Each train has the ability to produce more than 5 million tons of supercooled gas per year. Freeport LNG has signed take-or-pay tolling agreements with an array of companies for 13.4 million tons, the company said. Companies that have agreed to purchase gas from Freeport LNG include Osaka Gas Co., a Japanese gas supplier; Chubu Electric Power Co., a Japanese electricity provider; and BP Energy Company, which provides gas and power to U.S. utilities and industries.

At peak construction, the project is expected to generate more than 5,000 jobs. Once operational, about 300 full-time workers will be employed at the terminal.

“This expansion will further the substantial economic growth opportunities in Texas and across the United States derived from the project,” Smith said in a statement.