US LNG builders go modular to battle rising costs

U.S. LNG activity is booming as developers rush to build a wave of new liquefaction facilities to capitalize on growing export opportunities. But costs are rising, prompting a new trend in modular construction - read on for project insights from leading LNG developers.

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US LNG builders go modular to battle rising costs

LNG developers are using faster modular build processes to reduce the cost of labor and equipment, altering their relationships with construction groups and suppliers.

U.S. LNG activity is soaring on rising export demand and favorable government policies and many developers are turning to modular construction processes to mitigate rising costs.

A number of LNG developers have sought to renegotiate higher prices with buyers on the back of sharp increases in labor wages, U.S. steel tariffs and supply chain constraints.

"Developers face tough choices on EPC [engineering procurement construction] contracting, material sourcing, and risk allocation to maintain competitiveness in an increasingly expensive environment," research group Wood Mackenzie said in a report in July.

Modular construction involves the fabrication of individual sections of the LNG liquefaction plant in a controlled factory environment before transporting them to the site for assembly.

“Modular construction has the potential to reduce construction costs by offshoring both labor and equipment needs,” James Wyper, Senior Managing Director, Head of U.S. Private Equity and Head of Transportation & Logistics at infrastructure investor Stonepeak, told Reuters Events. Stonepeak acquired a 40% interest in Woodside Energy’s 16.6 million tonnes per annum (Mtpa) Louisiana LNG project in April 2025 and the project will include modular liquefaction technology.

“It can also shorten the construction timeline as certain tasks can be dual-tracked when the modules are pre-assembled offsite versus a more constrained stick-build (on-site) construction environment,” Wyper added.

Change in LNG demand by region, 2015-2023

Source: International Energy Agency (IEA)

Russia’s Novatek pioneered the use of modular construction on the 16.5 Mtpa Yamal LNG facility on an isolated peninsula on the Arctic coast in Siberia. The project was completed by 2018 in three phases with around 150 modules fabricated in Asia and then assembled on site.

Venture Global has been a U.S. leader in the adoption of modular technology at its Calcasieu Pass LNG project in Louisiana.

The 12.4 Mtpa Calcasieu Pass 1 (CP1) facility is online while site work for the 20 Mtpa CP2 project began in June 2025 and the facility is expected to reach first LNG production by the end of 2027. Standardized liquefaction modules for CP1 were manufactured at a Baker Hughes factory in Avenza, Italy and Venture predicts its modular approach will lower costs, accelerate delivery and improve reliability.

“Venture Global is the highest profile developer of modular U.S. LNG plants, but other project developers are utilizing the same approach, including Glenfarne at Texas LNG [and] Caturus at Commonwealth LNG [Louisiana]," Mark Bononi, principal analyst at Wood Mackenzie’s global gas and LNG asset team, told Reuters Events.

Less labor

Competition for labor and other resources in southwest Louisiana led to Commonwealth LNG opting for module construction for its 9.5 Mtpa facility in Cameron. Asset management group Kimmeridge holds a controlling stake in Commonwealth LNG under the holding company Caturus.

“The modules are built in fabrication yards by dedicated, full-time staff and then transported in for assembly. In addition to the cost savings, site construction risks are minimized and there is greater certainty of project duration,” Ben Dell, Co-Founder and Managing Partner of Kimmeridge and Chairman of Commonwealth LNG, told Reuters Events.

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Modular build will drastically reduce the number of workers on site at Commonwealth LNG, moving more than 10 million work-hours out of the field and into fabrication shops, the project developer said. Around 800 full-time field construction workers per month are expected at Cameron, on average. Less than 2,000 personnel are expected during the peak of construction compared to a peak labor force of 8,000 to 10,000 for a stick-build project, it said.

Cumulative LNG liquefaction capacity additions from post-FID projects

Source: International Energy Agency, September 2025

Global interest in modular construction is growing, according to Alessandro Bresciani, Senior Vice President, Energy Equipment, Industrial & Energy Technology at supplier and services group Baker Hughes.

Modular build can allow developers to access smaller sites or expand over time, he noted.

Baker Hughes supplies a package of modular LNG units that can each process from 0.8 up to 2 Mtpa and is designed to make LNG output viable for smaller reserves and in more remote locations which are uneconomical for traditional large-scale, stick-built plants.

New partnerships

Modular construction has a significant impact on the supply chain and changes the relationship between plant owners and EPC contractors, according to Wood Mackenzie’s Bononi.

A more collaborative process is required, multiple contractors may be used and developers may take on a greater share of the risk to attract construction partners or use flexible risk-sharing mechanisms like index pricing, he said. For example, Venture Global has recruited and hired a very large internal EPC team to manage nearly all aspects of construction.

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Despite numerous benefits, modular construction incurs risks in the transportation and on-site connection of key project modules and may not be advantageous for all projects. Long-distance transportation can lead to delays or damage to parts.

“While modular construction offers faster schedules and potentially lower total installed costs, there are notable potential drawbacks," Bononi said.

Reporting by Mark Shenk

Editing by Robin Sayles

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