South Texas LNG Project One Step Closer with Coast Guard Approval

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Researched by Industrial Info Resources (Sugar Land, Texas)--The U.S. Coast Guard gave the Brownsville Ship Channel on the Gulf of Mexico in south Texas a positive waterway suitability assessment (WSA) for tankers carrying liquefied natural gas (LNG). The decision helps pave the way for construction of NextDecade Corporation's (NASDAQ:NEXT) (The Woodlands, Texas) proposed Rio Grande LNG liquefaction and export terminal at the Port of Brownsville.

In the report, U.S. Coast Guard Captain R.A. Hahn wrote, "Based upon a comprehensive review of the applicant's WSA and after consultation with state and local port stakeholders, I recommend that the Brownsville Ship Channel be considered suitable for accommodating the type and frequency of LNG marine traffic associated with this project." One of the points of concern was the construction of a SpaceX (Hawthorne, California) rocket launch pad being built five miles away, but Hahn determined the two facilities could exist together.

The Rio Grande project would initially include two 4.5 million-ton-per-year LNG trains to produce a total of 9 million tons per year of LNG for export, which could be expanded in three subsequent phases. Construction on the first phase could begin in 2019, taking about four years to complete. Each subsequent phase would add 9 million tons per year of LNG production capacity, for a total capacity of 36 million tons per year. Each phase of construction has an estimated total investment value (TIV) of $8 billion. Chicago Bridge & Iron Company (NYSE:CBI) (The Hague, Netherlands) is performing design engineering. For more information, see Industrial Info's project reports on Phase I, Phase II, Phase III and Phase IV.

NextDecade has received authorization from the U.S. Department of Energy to export LNG to countries with a free trade agreement (FTA) with the U.S. The company awaits a decision to export to non-FTA countries, although NextDecade has already signed non-binding agreements for LNG sales to customers in Asia and Europe.

Accompanying the LNG terminal will be the 137-mile Rio Bravo natural gas pipeline, which will provide feed gas from the Eagle Ford Shale to the terminal. The pipeline would initially transport up to 2.25 billion cubic feet per day (Bcf/d) of gas from the Agua Dulce hub to the terminal. Pending approval from the Federal Energy Regulatory Commission, construction on the pipeline could begin late this year. Hunt, Guillot & Associates LLC (Ruston, Louisiana) is performing engineering on the project, which has an estimated TIV of $285 million. For more information, see Industrial Info's project report.

The Coast Guard's WSA decision could potentially open the door for a smaller LNG project also located at the Port of Brownsville. Annova LNG LLC (Houston, Texas), a subsidiary of Exelon Corporation (NYSE:EXC) (Chicago, Illinois), has plans to begin construction on a 2 million-ton-per-year LNG production facility. The plant could be expanded in two additional stages, each adding 2 million tons per year of production capacity. The initial phase would process a total of 315 million cubic feet per day of natural gas from the Eagle Ford Shale. Each stage of the project has an estimated TIV of $1.25 billion. Black & Veatch Incorporated (Overland Park, Kansas) is engineer. For more information, see Industrial Info's project reports on Stage A, Stage B and Stage C of the project.

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