Zachry Engineering, which filed for bankruptcy and sued the owners of Golden Pass LNG, in effect slowing construction on the already delayed project, filed a proposed settlement agreement in federal court on July 19.

The move by Zachry Industrial's subsidiary could allow Golden Pass LNG owners Exxon Mobil and QatarEnergy to resume normal construction on the $9.25 billion project, now expected to begin production in the second half of 2025. The project had previously been planned to start production at the end of 2024.

Zachry Engineering filed an emergency motion asking the court to approve the settlement, the terms of which were not disclosed. Zachry has asked that the terms be sealed. A hearing over the motion is scheduled for July 24 in Houston.

"The settlement seeks to resolve the pending disputes on terms that far exceed a hypothetical reasonable outcome. It breaks an impasse that has plagued the Debtors for years. It puts an end to the massive cost of litigating. It puts people back to work. It is a key step in a successful restructuring for a business that will return to profitability immediately. It is a favorable result for the estates, and the Court should approve it," Zachry wrote in the court filing.

With the court’s approval, engineering firm Chiyoda International Corp. would take over Zachry’s role as the lead contractor for engineering, procurement construction and payments to vendors.

Exxon Mobil said it could not comment on a potential settlement.

“We acknowledge the filing of an emergency motion by Zachry Holdings Inc. in its bankruptcy proceedings. We await the court’s review of the motion and cannot discuss its contents prior to the court’s ruling,” said an Exxon Mobil spokesperson in an email to Hart Energy.

With approval, Zachry said the settlement will provide a pathway out of bankruptcy.

According to the court filing, Golden Pass LNG will pay Zachry demobilization costs to start extricating itself from the project within five days of approval. Zachry will also receive payment for its financial obligations to its vendors and subcontractors.

The Golden Pass LNG project began in 2019, with Zachry and serving as lead contractor, responsible for 52% of the total scope of the work. Qatar Energy owns 70% of the project while Exxon Mobil owns 30%. At full production, the plant is designed to produce 18 million tonnes of LNG per annum.

San Antonio-based Zachry filed for Chapter 11 on May 21, saying that the project had dealt with unexpected challenges and the owners had not allowed the engineering firm to adjust its schedule.

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