DALLAS - Pursuing a $5 billion liquefied natural gas export facility at the Port of Brownsville, Texas, would threaten the Baa2 credit rating of the Exelon Corp. that is financing the project, according to Moody's Investors Service.
The company hopes to begin construction of the so-called Annova Project by third-quarter 2017, with a goal of making the project operational by December 2019.
Five companies have said they intend to file with Federal Energy Regulatory Commission to develop LNG terminals at Brownsville. In all, 11 proposed projects have been announced in Texas and four have announced private investment of about $38 billion.
The push for LNG export facilities comes as gas producers in Texas seek to expand markets amid sharply falling energy prices in the U.S. A glut of oil and gas has led to a storage crisis in Cushing, Okla., and other sites where fuel is stored in hopes of obtaining higher future prices.
The Texas Railroad Commission, an agency that facilitates oil and gas development in Texas, is also pushing for development of LNG facilities in the state.
Cheniere Energy of Houston is expected to be the first company to export gas next year from its $20 billion Sabine Pass facility in Cameron Parish, La., near the Texas border. It is building another $13 billion facility near Corpus Christi it hopes will open for business by 2018.
FERC has also approved construction of the Freeport LNG facility on Quintana Island, near Galveston. The government has given early approval to the Sempra LNG terminal in Hackberry, La.
"We expect ExGen to aggressively use debt financing at its Annova project, most likely with a non-recourse project financing structure, but consolidated on the balance sheet," Moody's said of the proposed Brownsville LNG plant. "Our estimates assume Annova produces about $500 million in EBITDA [Earnings Before Interest, Taxes, Dividends, Amortization] and costs around $5 billion to build and is 100% debt financed."
Annova LNG's facility would border the Brownsville Ship Channel on 650 acres designated by the Port of Brownsville for industrial use, about eight miles from the Gulf of Mexico.
