SABINE PASS, Texas — Citing "financial challenges" related to the Golden Pass LNG project in Sabine Pass, a major Texas construction company has filed for bankruptcy protection and announced plans to exit the project.
Zachry Holdings, Inc. announced Tuesday morning, May 21, 2024, that the San Antonio-based company has filed for chapter 11 bankruptcy according to a news release from the company.
In a text from LNG, they stated that hourly employees have been cut from the project.
"All Zachry GPX hourly employees have been officially separated as a reduction of force. Consistent with our standard practice, we will work to transition those impacted by this development to other Zachry work wherever possible," the message said.
The message then went on to tell them when they can pick up their tools.
- Train 1 personnel - You will be able to pick up your personal toolbox on Thursday 5/23 between the hours of 08:00-17:00. Security will direct you upon arrival at site.
- Brownfield/Utilities/OSBL personnel - You will be able to pick up your personal toolbox on Tuesday 5/28 between the hours of 08:00-17:00. Security will direct you upon arrival at site.
- For those unable to make the scheduled times appointed, additional toolbox collection will be available on 5/29 & 5/30 between the hours of 08:00 - 15:00.
The text left many of the now former employees reeling.
"It's a good job. it's a very good job. but somebody has to pay for something, you know?" said furloughed worker Patrick Doyle.
Doyle was a crane operator with Zachry holdings INC.
"In this field, we're used to this. Keep it moving, you know? Go on to the next one."
Like other furloughed workers, Doyle was forced to move fast in the face of uncertainty.
"We're just trying to keep feeding our family. we don't know what's going to happen," said Doyle.
The company's chairman and CEO, John B. Zachry, noted in a Tuesday morning news release that Zachry, the project's lead contractor, had faced "challenges and disruptions" during the LNG project. e specifically mentioned the COVID-19 pandemic and recent "international geopolitical issues."
Zachry is part of a joint venture known as CCZJV, along with Chiyoda and McDermott, that is working on the $10 billion project to build three Golden Pass LNG "trains" next to the company's existing LNG import terminal.
State-owned QatarEnergy owns a 70 percent of the Golden Pass project while ExxonMobil has a 30 percent share.
Golden Pass LNG issued a statement in response on Tuesday afternoon saying that they are committed to completing the project which is currently "75% progressed."
“Golden Pass LNG acknowledges the bankruptcy filing by Zachry Industrial, Inc., a party to the EPC contract for construction of our LNG terminal," said a spokesperson for Golden Pass LNG. "Work continues on the project with McDermott and Chiyoda, the other two parties to the EPC contract, with thousands of workers on site"
"These unforeseen disruptions have resulted in significant financial strain while meeting targets and keeping the project appropriately staffed," Zachry was quoted as saying by the news release.
Zachry was transparent with Golden Pass and its shareholders and had attempted to reach a resolution according to the release.
"Because we have been unable to find a path forward, we have been forced to take action to protect our business. The process we are starting today provides us mechanisms to initiate a structured exit from the GPX project," Zachry was quoted as saying by the release.
The voluntary court-supervised process is intended give the company the "time and flexibility to resolve issues related to the Golden Pass LNG (GPX) export terminal project."
The company says the filing is meant to strengthen its overall financial position as it keeps serving it's other customers according to the news release.
In early May a number of contract workers at Golden Pass LNG were furloughed in what Golden Pass confirmed there was a contract dispute with one of its contractors.
The furloughed workers were hourly, subcontractors of Zachry Industrial Group. In an email obtained by 12News, Zachry told contracted employees on Wednesday, May 8, 2024, to not to report to the Golden Pass site in Sabine Pass the next day, or until further notice. The email from Zachry led off with "as we work through the fuel shortage."
In the same email salaried Zachry employees were told to report as normally scheduled.
"There was a rumor going around that one week we're going to have a week off," Mark Ramirez told 12News just hours after being furloughed on May 8.
Ramirez went into detail about what he was told.
"This week we're going to short the hours down to forty hours. Then there was a diesel outage. They did not have money for the bus rides onsite to offsite," said Ramirez.
Golden Pass LNG acknowledged "ongoing discussions regarding the role of Zachry within CCZJV" in a statement sent to 12News on Thursday afternoon, May 9, 2024. "CCZJV" refers to a joint venture between Chiyoda International Corporation, McDermott International and Zachry Group according the Golden Pass LNG website.
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This is a developing story. We will update with more if and when we receive more confirmed information.