NextDecade updates on Rio Grande LNG construction work

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

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.

According to Rio Grande LNG’s July construction report sent to the US FERC, the project completed placement of the mud mat for LNG tank 1 and concrete placement for the
four breasting dolphin pile caps in jetty 1.

The project started placement of pre-cast LNG trenches in train 1, the general area excavation of train 2 cryo rack, mud mat and rebar placement for LNG tank 2 foundation, and mooring dolphin monopile driving for jetty 2.

Ongoing construction activities during the reporting period include breasting dolphin construction at jetty 1 and 2, underground firewater piping installation and testing, site civil activities such as concrete foundation work, construction of the material offloading facility, and structural steel in train 1.

Simultaneously, work continues for soil stabilization via deep mixing method (DMM) within train 2 area, production pile-driving, improvement of onsite laydown areas and work pads to support construction, arrangement of temporary facilities, utilities, and structures.

Construction of the facility perimeter levee continues to progress in multiple areas of the site, as well as improvements in temporary drainage and onsite construction roads, Rio Grande LNG said.

In August, Rio Grande will continue the ongoing work and anticipates completion of train 2 DMM and the permanent driveways associated with the non-jurisdictional State Highway 48 modifications.

The project plans to start initial placement of concrete for LNG tank 1 ring foundation.

NextDecade exploring all actions

NextDecade’s CEO Matt Schatzman recently said the company is committed to taking all available legal and regulatory actions to ensure that the first phase of its Rio Grande LNG project will be delivered on time and budget and that FID of trains 4 and 5 will not be unduly delayed.

Earlier this month, NextDecade said that construction continues on the first phase of its Rio Grande LNG export terminal despite a ruling by a US court.

The US Court of Appeals for the D.C. Circuit on August 6 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.

“We do not agree with the D.C. Circuit Court’s recent decision to vacate the FERC’s remand authorization of the Rio Grande LNG facility,” Schatzman said.

According to NextDecade, the Court’s decision will not be effective until the court has issued its mandate, which is not expected to occur until the appeals process has been completed.

The company is reviewing the Court’s decision and assessing all of its options, together with the key project constituencies, including its equity partners and lenders.

NextDecade expects to take all available legal and regulatory actions, including but not limited to, appellate actions and other strategies.

Fourth train

During the second quarter, NextDecade made “excellent” commercial progress for the fourth train, Schatzman said.

“These developments, alongside our expectation that TotalEnergies will exercise its LNG purchase option for 1.5 mtpa, lead us to believe that we will soon reach the necessary contracted capacity to commercially support Train 4,” he said.

In June, Saudi Arabia’s energy behemoth Aramco signed a non-binding deal to buy LNG from NextDecade’s Rio Grande LNG export terminal.

Under the terms of heads of agreement, Aramco expects to buy 1.2 mtpa of LNG for 20 years from the fourth Rio Grande LNG train on a free on board basis, at a price indexed to Henry Hub.

This agreement with Aramco followed a deal with UAE’s Adnoc announced on May 10.

Adnoc purchased an 11.7 percent stake in the first phase of NextDecade’s Rio Grande LNG export terminal from Global Infrastructure Partners.

Adnoc and NextDecade also entered into a 20-year LNG offtake agreement for the fourth Rio Grande LNG train.

The LNG offtake agreement is for 1.9 mtpa from Train 4, on a FOB basis at a price indexed to Henry Hub.

NextDecade also recently signed a lump sum turnkey engineering, procurement, and construction (EPC) contract with compatriot 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, which is currently under construction, it said.