Sempra's LNG and Infrastructure Strategies: Key Investor Insights

Current LNG Projects and Developments

Sempra is advancing its LNG projects, notably the Port Arthur LNG Phase 2, which aims to meet global energy demands with cleaner solutions. Despite regulatory and financial challenges, Sempra remains confident in delivering secure, long-term LNG projects, leveraging renewable power and innovative technologies to reduce emissions.

"Al will speak to this in greater detail later in today's presentation. And finally, at Sempra Infrastructure, we're supporting global demand for energy security are in the midst of a second wave of LNG developments expected to support over 700 million tonnes per annum of demand by 2050." --- (SRE, earning call, 2024/Q1)

"We are progressing the development of the proposed PA LNG Phase 2 project, while continuing to evaluate overall opportunities to develop the entirety of the Port Arthur site as well as potential design changes that could reduce GHG emissions, including a facility design utilizing renewable power sourcing and other technological solutions." --- (SRE, sec filing, 2024/Q1)

"The development of the Port Arthur LNG Phase 2 project remains subject to a number of risks and uncertainties, including completing the required commercial agreements, securing and/or maintaining all necessary permits, obtaining financing, and reaching a final investment decision, among other factors." --- (SRE, press release, 2024/07/18)

""Building on the success of Port Arthur LNG Phase 1, which is currently under construction, the Phase 2 project is expected to further enhance the supply of secure, abundant and reliable U.S. natural gas to customers around the globe." "We are excited for the opportunity to advance our partnership with Sempra Infrastructure on the Port Arthur LNG Phase 2 project, a vital project that will play a crucial role in meeting the world's increasing need for cleaner and more reliable energy," said Paul Marsden, President of Bechtel Energy." --- (SRE, press release, 2024/07/18)

"Turning to our marketing efforts. The LNG market is long-term by nature and while the DOE pause has received a lot of press, we remain confident in our ability to deliver projects that offer long-term, secure, and cleaner energy to customers." --- (SRE, earning call, 2024/Q1)

Infrastructure Investments and Strategic Importance

Sempra's infrastructure investments target mid-teens returns on equity, emphasizing disciplined capital allocation. Their strategic positioning in key markets supports increased investment in transmission and distribution. Investments focus on electrification, decarbonization, and system hardening to improve reliability and withstand extreme weather, highlighting their strategic importance.

"In addition, we make energy infrastructure investments that target attractive mid-teens returns on equity and we understand that disciplined capital allocation is central to our success." --- (SRE, earning call, 2024/Q1)

"We will continue to approach global energy challenges with an entrepreneurial mindset, steadfast optimism and confidence in our collective strength to deliver energy with purpose. Sempra's three growth platforms – Sempra California, Sempra Texas and Sempra Infrastructure – are strategically positioned in significant economic markets where public policy supports increased investment in transmission and distribution infrastructure." --- (SRE, press release, 2024/05/09)

"At Sempra Infrastructure, we had $13 million of lower transportation revenues and higher O&M, partially offset by higher power results, and $27 million of lower asset and supply optimization, partially offset by lower net interest expense due to capitalized interest, lower taxes and other." --- (SRE, earning call, 2024/Q1)

"And through our general rate cases, we're expecting to make new investments that support electrification and decarbonization while also improving affordability, safety and reliability." --- (SRE, earning call, 2024/Q1)

"And one of the things that we're interested in at Sempra, very much like all the investments that we make across our different growth platforms, this plan is intended to harden our system to withstand extreme weather conditions, reduce restoration outage times and improve overall reliability." --- (SRE, earning call, 2024/Q1)

Market Demand for LNG

The strong market demand for LNG is evidenced by Tellurian's strategic moves, including the acquisition of Driftwood LNG, which is fully permitted and export-authorized. Despite Sempra's revenue decline due to lower natural gas prices, Tellurian's focus on establishing a competitive LNG enterprise and active trading operations underscores robust market interest.

"Creates a global LNG powerhouse Attractive entry into scalable, fully permitted 27.6 million tonnes per annum (Mtpa) US LNG development option Significant cash generation potential to underpin long-term shareholder returns Woodside has entered into a definitive agreement to acquire all issued and outstanding common stock of Tellurian (NYSE:TELL) including its owned and operated US Gulf Coast Driftwood LNG development opportunity ("Driftwood LNG")." --- (TELL, press release, 2024/07/21)

"In the three months ended March 31, 2024 compared to the same period in 2023, Sempra’s revenues from energy-related businesses decreased by $646 million to $475 million primarily due to: ▪ $611 million from asset and supply optimization from contracts to sell natural gas and LNG to third parties, including: ◦ $510 million primarily driven by $22 million unrealized losses in 2024 compared to $418 million unrealized gains in 2023 on commodity derivatives and $146 million primarily from lower natural gas prices" --- (SRE, sec filing, 2024/Q1)

"The Driftwood LNG development opportunity is competitively advantaged: The development is fully permitted, and has a valid non-free trade agreement (FTA) export authorisation." --- (TELL, press release, 2024/07/21)

"About Tellurian Inc. Tellurian aims to generate shareholder value by establishing a competitive LNG enterprise, effectively supplying natural gas to customers worldwide." --- (TELL, press release, 2024/07/21)

"The Marketing & Trading segment is organized and operates to purchase and sell natural gas produced primarily by the Upstream segment, market the Driftwood terminal’s LNG production capacity and trade LNG." --- (TELL, sec filing, 2024/Q1)

Technological Advancements and Innovations

Sempra is advancing technological innovations to reduce greenhouse gas emissions, enhance energy efficiency, and support climate goals. The company is also focused on making resources more dependable, sustainable, and useful, promoting global growth and productivity.

"The progress in this report represents our next step in an exciting evolution in serving customers and communities while reducing greenhouse gas emissions, promoting energy efficiency and resiliency, and advancing California's climate goals," says Jawaad Malik Chief Strategy and Sustainability Officer at SoCalGas." --- (SRE, press release, 2024/05/13)

"We focus on making our resources more dependable, more sustainable and more useful, helping to promote growth and productivity around the world." --- (SRE, press release, 2024/06/26)