Sempra Infrastructure, an affiliate of San Diego-based Sempra, has pushed the commercial operations date for Energía Costa Azul (ECA) LNG Phase 1 from the summer of 2025 to early 2026, citing labor and productivity challenges.

Mechanical completion and first LNG are expected to occur in 2025, with timing of commercial operations under the sales and purchase agreements targeted for spring 2026, Sempra Infrastructure said Aug. 6 in its second quarter 2024 financial press release.

“We are actively engaged with our contractor to advance the project and will see increased capital expenditures for the project in the form of additional carrying costs, and lower estimated commissioning revenues which are based on forward price curves,” Sempra CFO Karen Sedgwick added in the company’s webcast.

“Despite the delay and potential changes in capital, we still expect to maintain strong integrated financial returns consistent with our original forecast at the time we took FID in 2020,” Sedgwick said.

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ECA LNG Phase 1, located in Ensenada in Baja California, Mexico, will source U.S. feedgas and have a nameplate processing capacity of 3.25 million tonnes per annum (mtpa) or around 0.43 Bcf/d. ECA’s LNG is destined primarily for Asian markets.

Sempra CEO Jeff Martin said the company was disappointed in the change of schedule at ECA.

“As has been our practice when we work with our contractors, we expect our projects to be built on time and on budget. That is the standard at Sempra and in this case that standard has not been met,” Martin said during the webcast.

Martin said Sempra still maintains targeted leveraged returns for the overall integrated ECA project, despite the estimated increase in capital. Sempra’s net share increase in capital will represent about $300 million, he said.

Construction at ECA Phase 1 is approximately 85% complete. Steel construction is complete and focused on above-ground piping, which is 65% complete, Sempra Infrastructure CEO Justin Bird said during the webcast.

Around 95% of the equipment has been received onsite and nearly 80% of that equipment has been delivered, Bird said.

“The critical issue has been that during our peak in the work cycle, given some of the labor constraints in Baja, that our contractor was unable to retain and secure the necessary labor resources to meet the schedule and this loss of labor has created a change in schedule,” Bird said.

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Sempra Infrastructure has an 83.4% working interest in ECA LNG Phase 1, while France’s TotalEnergies has the remaining 16.6% working interest in the project.

A second phase of ECA LNG is also planned and will have 12 mtpa of export capacity.