Zachry Holdings, the lead contractor responsible for building the $10 billion Golden Pass LNG project in Texas for QatarEnergy and Exxon Mobil, has filed for Chapter 11 bankruptcy protection. The company cited challenges at the LNG plant construction site as the reason for the filing.
Zachry Holdings held the lion’s share of the construction work for the Golden Pass LNG project, which is being built at the site of a former gas-import terminal that has been converted to process natural gas for LNG exports. The project is one of two large U.S. LNG terminals expected to significantly expand exports in the next 12 months.
In a statement, Exxon, which owns a 30% stake in the project, said it would review the construction timing and provide an update in the future. The company also said it would continue to fully support the Golden Pass LNG project through completion.
John Zachry, CEO of the San Antonio, Texas-based company, said that they had been unable to find a path forward and had been forced to take action to protect their business. According to the bankruptcy filing, Zachry faced cost challenges over a change order and billing schedule, and had engaged in negotiations with Golden Pass LNG for additional funding without success.
Prior to April 2024, Zachry was incurring weekly expenses of $30 million to $40 million for payroll, vendor payments, equipment, and other costs, but was receiving approximately $70 million per month from Golden Pass LNG. However, in March of this year, Golden Pass began directly paying vendors and clawing back much of those funds from advance progress payments due to Zachry.
The bankruptcy filing states that on May 8, Golden Pass notified Zachry of default of its engineering, procurement, and construction contract, citing Zachry’s inability to pay subcontractors and vendors promptly, among other factors. Unable to reach an agreement with Golden Pass, Zachry said it had no choice but to file for Chapter 11 protection.
The Golden Pass LNG project is one of two large LNG export plants expected to expand U.S. LNG exports in the next 12 months. The United States is currently the largest exporter of LNG globally.