NextDecade: Rio Grande LNG work progresses

US LNG firm NextDecade is moving forward with construction work on the first phase of its Rio Grande LNG export terminal in Texas. The company still expects to make a final investment decision to build the fourth liquefaction train in the second half of 2024.

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 compatriot Bechtel and it officially kicked of 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.

Construction update

NextDecade expects substantial completion of the first Rio Grande train in 2027, followed by the second train and the third train in 2028/2029.

Besides three liquefaction trains, the first phase includes building two 180,000-cbm full containment LNG storage tanks, and two jetty berthing structures designed to load LNG carriers up to 216,000 cbm in capacity.

Phase 1 also includes associated site infrastructure and common facilities including feed gas pretreatment facilities, electric and water utilities, two totally enclosed ground flares for the LNG tanks and marine facilities, etc.

NextDecade said in its first quarter business update issued on Thursday the overall project completion percentage for trains 1 and 2 and the common facilities of the Rio Grande LNG facility was 18.2 percent, which is in line with the schedule under the Bechtel EPC contract.

Within this project completion percentage, engineering was 54.9 percent complete, procurement was 34.4 percent complete, and construction was 1.9 percent complete.

NextDecade Rio Grande LNG
Train 1 area (Image: NextDecade)

Also, the overall project completion percentage for train 3 of the Rio Grande LNG facility was 6.9 percent, based on preliminary schedules, which is also in line with the schedule under the EPC contract.

Within this project completion percentage, engineering was 5.2 percent complete, procurement was 16.7 percent complete, and construction was 0 percent complete.

Matt Schatzman, NextDecade’s chairman and CEO said the Rio Grande LNG facility has “truly begun to take shape recently, as concrete foundation pours for train 1 are ongoing, key materials such as piping and structural steel have been delivered to the site, and shoreline work and levee construction are underway.”

“Proactive project and risk management remain key priorities as construction of Phase 1 continues to progress,” he said.

FID for fourth train

NextDecade said in a project update in November last year that it expects to sanction the fourth liquefaction train in the second half of 2024 and confirmed this target in January this year and in March this year.

The company’s partner TotalEnergies has LNG purchase options of 1.5 mtpa for each of train 4 and train 5.

If TotalEnergies exercises its LNG purchase options, NecDecade estimates that an additional 3 mtpa of LNG must be contracted on a long-term basis for train 4 and 5 prior to making a positive FID for the respective train.

Marine offloading facility (Image: NextDecade)

“We are focused on achieving a positive FID on Train 4 in the second half of this year,” Schatzman said.

He said that NextDecade expects TotalEnergies to exercise its option to purchase 1.5 million tonnes per annum of LNG from train 4, and commercial discussions are “progressing well with numerous additional counterparties” for the remainder of the LNG necessary to support a positive FID on train 4 this year.

“Additionally, we are continuing to work with Bechtel on the EPC contracting process, which we expect will enable us to finalize the EPC contract for train 4 by the end of the second quarter of 2024,” Schatzman said.

“We are determined to capitalize on the robust market opportunity to unlock the value of our fully permitted, brownfield expansion capacity, and we are strongly committed to do so in a way that maximizes value to our shareholders,” he said.

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