NextDecade Soldiers on With Rio Grande LNG Plant

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The first phase of NextDecade LNG LLC's (NASDAQ:NEXT) (Houston, Texas) Rio Grande export facility for liquefied natural gas (LNG) in Texas is on schedule and on budget, the developer said amid concerns over a market glut.

NextDecade is building its Rio Grande facility near the Brownsville shipping channel on the Texas Gulf Coast. The facility is permitted for as much as 1.3 billion cubic feet (Bcf) of liquefied natural gas (LNG) exports per year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can click here for a full list of detailed reports for projects associated with Rio Grande.

Matt Schatzman, the chief executive officer of NextDecade, said progress on construction of the first phase of the project was excellent during the three-month period ending September 30.

"The facility continues to progress safely, in line with schedule, and on budget, and the site has significantly advanced in the past few months," he said.

NextDecade's multi-train facility will have a peak processing capacity of 3.73 billion cubic feet per day (Bcf/d), with feedstock coming largely from the Permian and Eagle Ford shale basins in Texas and New Mexico.

Bechtel Energy (Reston, Virginia) is leading overall developments for NextDecade's construction efforts. Overall, the first two liquefaction trains are about 30% complete, though the bulk of that represents engineering work. Only about 5.5% of the actual construction had been completed as of September.

"We remain committed to working with Bechtel to prioritize safety and risk management as Phase I construction continues," Schatzman said.

Progress, however, has proved difficult for the company. The D.C. Circuit Court of Appeals this year overturned approval of the entire facility due to a lack of a suitable environmental impact statement.

NextDecade in October filed a petition for a rehearing. In the meantime, the company said that construction would continue while the appeals process plays out.

Elsewhere, though still touting the entire project as clean, the company in August pulled an application for a carbon capture and storage (CCS) facility at the planned Texas plant due to a lack of development. Schatzman at the time said the sequestration facility wasn't developed enough for a review from the U.S. Federal Energy Regulatory Commission (FERC).

NextDecade proposed the CCS facility in 2021, aiming to cut its carbon dioxide (CO2) emissions at Rio Grande by more than 90%. Though cleaner than other fossil fuels, critics argue that LNG is still a polluting fossil fuel, with a carbon footprint along the entire supply chain far greater than cleaner sources of energy such as wind power.

Methane in the industry is another concern. A greenhouse gas with far greater warming potential than CO2, methane is a main component of natural gas that has a chance for release along the supply chain.

Engineering work is underway for a third train, and NextDecade expects to make a final investment decision (FID) on a fourth liquefaction facility by the end of the year. Engineering, procurement and construction contracts for a fifth train would follow the FID.

Saudi Aramco and the Abu Dhabi National Oil Company hold minority interests in the Rio Grande facility, which would only add to the supply-side concerns for liquefied natural gas. The International Energy Agency (IEA) in an October report said it expects capacity to increase from 20.5 trillion cubic feet to 30 trillion cubic feet by 2030.

"This increase in export capacity is larger than projected LNG demand growth; the result is an overhang of capacity which is set to depress international gas prices and set the stage for fierce competition between suppliers," the IEA's report said.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).