San Diego-based energy giant Sempra plans to invest in offshore wind in California.
Sempra Infrastructure, a subsidiary of the Fortune 500 company, and French multinational TotalEnergies on Thursday announced the signing of two letters of intent — one for a liquefied natural gas, or LNG, project that Sempra plans to build in Mexico and the other for an offshore one -Project wind turbine that TotalEnergies is pursuing in Morro Bay.
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According to the non-binding memo, Sempra Infrastructure may acquire about 30 percent of Total’s equity interest in the wind project, which is expected to generate 1 gigawatt of electricity for the state grid from its proposed site about 20 miles offshore.
TotalEnergies and its partners will participate in a federal government-sponsored leasehold sale for potential sites off the coasts of northern and central California. The sale is planned for this year.
In late February, a federal government auction for rights to develop wind projects off the coast of New York and New Jersey raised a record $4.37 billion in high bids from energy developers.
The LOI also includes a framework for TotalEnergies to potentially acquire a 30 percent equity interest in Sempra Infrastructure’s renewable and energy storage projects in northern Mexico.
“We own one of the largest energy grids in North America, and by working with TotalEnergies to create additional economies of scale in LNG and renewable energy, our customers will benefit from access to cleaner and more affordable energy options and improved security of supply,” Sempra CEO Jeff Martin said in a statement.
Renewable energy developers have long sought to take advantage of the strong winds that constantly blow off California’s shores. An analysis conducted by the National Renewable Energy Laboratory in late 2016 estimates that there is enough offshore wind power to generate about 1.5 times the state’s energy use, based on 2014 figures.
But construction will be more difficult than in other parts of the country because the continental shelf drops off steeply off the Pacific coast.
Instead of bolting massive wind turbines to the seabed, developers need to use floating turbines. The electricity generated by the turbines would be transmitted to a floating substation and transported via underground cables to a power station on land.
The first operational floating wind farm, commissioned off the coast of Scotland in 2017, with turbines stretching 574 feet above the water.
Earlier this year, the California Independent System Operator — the nonprofit organization that manages the power grid for about 80 percent of the state — released a long-term outlook that identified 10 gigawatts of offshore wind power that will come online in 2040 from various projects.
TotalEnergies has ambitions to become one of the five largest producers of renewable energy in the world by 2030.
At the same time, Total and Sempra have a long history of collaborating on natural gas projects including Cameron LNG, the $10 billion facility on the Louisiana Gulf Coast that opened in August 2019 and serves customers supplying gas to international markets. The two companies are also part of a joint venture building an LNG export component for the existing Energía Costa Azul facility near Ensenada, Mexico.
The second letter of intent announced Thursday sets a framework for TotalEnergies to complete approximately one-third of the long-term export production from Sempra’s proposed Vista Pacifico LNG project. When completed, it would export gas cargoes from Topolobampo, a port city on the Gulf of California in the state of Sinaloa, to destinations around the world.
The memo also allows Total to potentially become a minority equity investor in the project.
Vista Pacifico would extract natural gas from the Permian Basin in the United States and bring it to the plant via two pipelines. The LNG could then be shipped directly across the Sea of Cortez to the city of La Paz, where it could be converted back to a usable, gaseous state at a planned regasification facility and then used by customers in Baja California Sur.
The project has yet to receive additional approval from the US Department of Energy, as well as permits from the Mexican government, but in January Sempra Infrastructure signed a non-binding agreement with Mexico’s state-owned electric company, CFE, that could pave the way for construction.
LNG exports have gained importance in the wake of the Russian invasion of Ukraine. Russia provides about 40 percent of the natural gas consumed by countries in Europe, leaving them vulnerable to Moscow to heat their homes, generate electricity and run the fuel industry.
Last week, at an overseas meeting, President Joe Biden offered a significant increase in natural gas supplies to “help Europe reduce its dependence on Russian gas as quickly as possible.”
LNG exporters have been expanding shipments to Europe in recent months and subject to federal government approval, Sempra plans to expand its Cameron LNG facility and increase its production capacity by 6.75 million tonnes per year.
LNG export facilities take natural gas via pipelines, cool it to minus 260 degrees Fahrenheit, load the liquefied product into purpose-built cargo tanks on double-hulled ships that ship the LNG to markets around the world, many of which plan to replace coal natural gas.
Because natural gas burns about twice as cleanly as coal, proponents of LNG say it’s an effective and greener option. But environmental groups oppose LNG exports, saying it expands the world’s use of fossil fuels. Methane can escape from natural gas pipelines, drilling sites and other infrastructure. Methane is about 30 times stronger than CO2 when released into the atmosphere.