Some new liquefied natural gas (LNG) projects in the US Gulf Coast are experiencing delays due to a shortage of skilled labor and lingering inflation risks.
Labor Shortage, Rising Inflation Threaten to Derail New LNG Projects
According to Reuters, five LNG plants are currently being built in Texas and Louisiana, and 16 projects are in the planning stages across the US. These ongoing projects are expected to add a total of 86.6 million metric tons per year of LNG, ensuring the US maintains its position as the world's top exporter for years to come.
Since 2021, labor costs have surged by up to 20%, inflating construction budgets and reducing projected returns for companies still seeking investors. According to Reuters, this escalation has cast doubt on the viability of some early projects.
Golden Pass LNG, one of the country's biggest projects, faced significant setbacks when its main contractor exceeded the budget by $2.4 billion and eventually declared bankruptcy, halting much of the work.
Rising Construction Costs
Due to rising construction costs, Sempra LNG reconsidered to have Bechtel Corp. construct its Cameron LNG expansion and has scaled back its stake in the Port Arthur LNG project in Texas.
On the other hand, NextDecade faced higher engineering, procurement, and construction costs for the first phase of its $18 billion Rio Grande LNG export terminal. According to analysts, the company recruited new investors that cut its original investors' stake to proceed with the project.
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