The lead contractor for the Golden Pass LNG export terminal project has laid off 4,410 workers at the construction site—a move likely to delay the project’s completion timeline by months.

The start date for Golden Pass’ Train 1 had been anticipated by the end of 2024. However, Zachry Engineering, which filed for bankruptcy in May, notified the Texas Workforce Commission that it would cut its workforce at the site.

TPH analyst Zack Van Everen wrote in a June 6 report that the firm “now assumes train one will be online by the end of June 2025, with trains two and three following in December 2025 and March 2026, respectively.”

Van Everen told Hart Energy that the project leaders will most likely attempt to keep Zachry’s laid-off employees onsite.

“It's hard to tell what happens at this point; I imagine they try to keep those workers on the project, as that skill market is tight right now,” Van Everen wrote.

Van Everen noted that Golden Pass LNG had filed a construction inspection report with the Federal Energy Regulatory Commission that acknowledged Zachry’s bankruptcy filing. Golden Pass LNG said the in-service timing for the project was the first half of 2025, while noting that Zachry’s filing “may impact completion timelines.”

Zachry Engineering filed for Chapter 11 bankruptcy protection on May 21. In part, the reorganization was to provide the firm with “time and flexibility to resolve issues related to the Golden Pass LNG (GPX) export terminal.” The company has alleged in court documents that Golden Pass and its owners, Exxon Mobil and Qatar Energy, have been unwilling to match increased expenses related to the project.

In a letter to the workforce commission, sent on June 3, Zachry general counsel James Old wrote that the majority of Zachry’s employees at Golden Pass would be affected and that the separations would be permanent.

Golden Pass released a statement on May 21, when Zachry first announced its bankruptcy, that work on the site would continue with two other project contractors, naming McDermott Construction and Chiyoda Corp. The project is about 75% complete, according to Golden Pass.

Several analysts have stated that demand for the project, and the LNG it will produce, remains high. However, the bankruptcy could mean Golden Pass would lose 219 Bcf of gas demand in the first half of 2025.

Claims against Exxon, Qatar Energy

In court documents, Zachry alleged that costs associated with the $10 billion LNG project have risen but that Exxon Mobil (30% owner) and Qatar Energy (70% owner) have refused to pay the difference.

After work began in 2019, Zachry faced extra costs because of faulty studies of the geologic conditions on site; the COVID-19 pandemic; and other supply chain problems caused by the war in Ukraine, according to Zachry’s filing with the Southern District Court of Texas in Houston.

The firm stated that by 2022, it needed an additional $2.4 billion to complete the project by the agreed schedule.

In Zachry’s bankruptcy filing, the firm alleged that Golden Pass LNG, Exxon Mobil and Qatar Energy used their position to force the contractor to front the increased costs with “false promises” to reimburse Zachry upon completion.

“In an attempt to right-size the contract while faithfully keeping the project on track, over the last two years (Zachry) and its joint venture partners have engaged in negotiations with Golden Pass and its owners to address this need for additional funding for the GPX Project, with little to no success,” Zachry wrote in its filing.