Construction progresses on NextDecade’s Rio Grande LNG project

Schatzman said in a third-quarter business update that the facility “continues to progress safely, in line with schedule, and on budget, and the site has significantly advanced in the past few months.”

“The Bechtel team has done exemplary work, including continued pipe work for Train 1, completing the first foundation pour for Train 2, and preparing to begin deep soil mixing for Train 3,” he said.

Bechtel has also laid feed gas piping and begun constructing walls for both storage tanks.

In July 2023, NextDecade took the final investment decision on the first three Rio Grande trains and completed $18.4 billion project financing.

NextDecade awarded the $12 billion EPC contract to Bechtel, and it officially kicked off work on the plant in October last year.

The firm also closed a joint venture agreement for the first phase which included about $5.9 billion of financial commitments from Global Infrastructure Partners (GIP), GIC, Mubadala, and TotalEnergies.

NextDecade holds equity interests in the Phase 1 joint venture that entitle it to receive up to 20.8 percent of the distributions of available cash during operations.

Phase 1, with nameplate liquefaction capacity of 17.6 mtpa, has 16.2 mtpa of long-term binding LNG sale and purchase agreements.

These include deals with TotalEnergies, Shell, ENN, Engie, ExxonMobil, Guangdong Energy Group, China Gas Hongda Energy Trading, Galp, and also Itochu.

Including trains 4 and 5, the Rio Grande LNG facility would have a capacity of 27 mtpa.

First two trains 30.5 percent complete

Under the EPC contracts with Bechtel, Phase 1 progress is tracked for Train 1, Train 2, and the common facilities on a combined basis and Train 3 on a separate basis.

As of September 2024, the overall project completion percentage for Trains 1 and 2 and the common facilities of the Rio Grande LNG Facility was 30.5 percent, which is in line with the schedule under the EPC contract, NextDecade said.

Within this project completion percentage, engineering was 76.1 percent complete, procurement was 57.6 percent complete, and construction was 5.5 percent complete.

NextDecade said the overall project completion percentage for Train 3 of the Rio Grande LNG facility was 9.8 percent, which is also in line with the schedule under the EPC contract.

Within this project completion percentage, engineering was 17 percent complete, procurement was 21.9 percent complete, and construction was 0.1 percent complete.

Regulatory actions

NextDecade recently sought a rehearing of the D.C. Circuit Court’s ruling on its Rio Grande LNG project in Texas.

In August, the US Court of Appeals for the D.C. Circuit issued an order vacating the Federal Energy Regulatory Commission’s remand authorization of NextDecade’s Rio Grande LNG facility on the grounds that the FERC should have issued a supplemental environmental impact statement (EIS) during its remand process.

In September, the FERC said it will prepare a supplemental environmental impact statement for the Rio Grande LNG project.

“We have been managing the D.C. Circuit Court’s August decision to vacate the reauthorization of the Rio Grande LNG facility with our partners and stakeholders,” Schatzman said.

“The Court’s decision will not become effective while the appeals process is ongoing, and we remain committed to taking any and all available legal and regulatory actions to ensure that Phase 1 will be delivered on time and on budget and that FID on Trains 4 and 5 will not be unduly delayed,” he said.

Trains 4 and 5

In August, NextDecade signed a lump sum turnkey engineering, procurement, and construction (EPC) contract with Bechtel for the construction of the fourth train and related infrastructure at the Rio Grande LNG facility.

The company’s unit Rio Grande LNG Train 4 agreed to pay Bechtel about $4.3 billion for the work under the EPC contract.

Total estimated project costs are expected to be $6-$6.2 billion for Train 4 and related infrastructure, in line with the per train cost of the three-train Phase 1 at the Rio Grande LNG facility.

Achieving a positive FID on Trains 4 and 5 at the Rio Grande LNG Facility will be subject to, among other things, maintaining requisite governmental approvals, finalizing and entering into EPC contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure, NextDecade said in the update.

The company said it continues to advance commercial discussions with “multiple potential counterparties” and expects to finalize commercial arrangements for Train 4 in the coming months to support an FID on Train 4.

The company entered into an LNG sales and purchase agreement (SPA) with UAE’s Adnoc for the sale of 1.9 mtpa of LNG from Train 4, as well as a non-binding heads of agreement with Saudi Arabia’s Aramco for the sale of 1.2 mtpa of LNG from Train 4.

NextDecade said it is working with Aramco to finalize a binding SPA.

Additionally, the company expects TotalEnergies to exercise its LNG purchase option for 1.5 mtpa of LNG from Train 4.

NextDecade expects to begin the EPC contracting process for Train 5 after a positive FID on Train 4.

TotalEnergies also holds an LNG purchase option for 1.5 MTPA for Train 5, and the Rio Grande Phase 1 equity partners have options to invest in Train 5 equity which are identical to their options to participate in Train 4 equity.