AECOM Capital invests in Mexican LNG export project

AECOM Capital has invested in Mexico Pacific's planned DKRW Sonora LNG export project in western Mexico.

Mexico Pacific said it has now raised sufficient funds to complete pre-construction work, as part of its goal to start exporting in 2022. The amount was not disclosed by the parties.

"This is an important milestone that advances our ability to offer the lowest all-in cost LNG to Mexican, South American, central American and Pacific basin markets from a uniquely advantaged next-generation west coast LNG facility," said Mexico Pacific president Robert Kelly.

Mexico Pacific is owned by DKRW Energy Sonora Holding and AECOM Capital, the investment arm of global infrastructure company AECOM.

The greenfield facility would be located in Puerto Libertad along the western coast of the Gulf of California, in the Mexican state of Sonora. The project initially plans to liquefy US gas and in the future possibly also use Mexican gas.

Mexico Pacific plans to use small modular liquefaction units that would allow it to only install the capacity it is able to market. It is targeting initial production of 2mn-4mn t/yr, equivalent to 256mn-513mn cf/d (2.6bn-5.3bn m³/yr) of gas, but the output could be increased based on demand. The 1,100-acre site has been permitted for capacity of more than 10mn t/yr, Mexico Pacific said.

DKRW last decade proposed building a $1bn LNG import facility in Puerto Libertad to serve the US southwest and Mexico. The US shale gas boom virtually eliminated demand for US LNG imports, causing the project to focus on exports. Mexico in recent years has significantly increased its US pipeline gas imports because of the low prices of those supplies.

Former US midstream company El Paso jointly developed the import project with DKRW, as it planned to use its pipeline system to send regasified LNG to the US southwest. The system has direct access to west Texas production basins and crosses the US-Mexico border in Arizona. US midstream company Kinder Morgan bought El Paso for $21bn in a deal completed in 2012.

Mexico Pacific said "there is more than sufficient infrastructure already built" to supply the export project with its gas needs for its foreseeable future.

Mexico Pacific also is exploring building an energy hub at the site that would also help the state of Sonora use more gas to displace fuels that cause more pollution. The feed gas could also support methanol and ammonia projects at the site, it said.

DKRW Energy is wholly owned by a portfolio of funds managed by New York-based Oz Management, which manages about $32bn in assets.

A major reason that developers are looking at northwestern Mexico to liquefy US gas for further export is strong environmental opposition along the US west coast to major infrastructure projects. San Diego-based Sempra Energy is exploring converting its existing Energy Costa Azul LNG import terminal in Baja California, Mexico, to an export project.

The North American west coast would offer significantly shorter and cheaper shipping routes to major Asian markets than US Gulf coast projects, but construction costs would be higher for west coast greenfield facilities.