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NextDecade Corp.’s $18.4 billion Rio Grande LNG (RGLNG) export facility is a go, the company said on July 12 in a press release.
The company reached a final investment decision (FID) on the first three trains for the 17.6 million tonnes per annum (mtpa) Phase 1 of its liquefaction facility in Brownsville, Texas.
NextDecade said the planned 27 mtpa RGLNG facility to be built in two phases is the largest greenfield energy project financing in U.S. history and “underscores the critical role that LNG and natural gas will continue to play in the global energy transition.”
U.S. LNG exporters gained greater importance in 2022 and especially in Europe after Russia’s invasion of Ukraine and Moscow’s decision to reduce gas exports to the European Union. Demand for LNG is expected to remain robust in Europe and Asia for decades, according to many analysts.
The FID comes as NextDecade executed and closed a joint venture (JV) agreement for Phase 1 which included approximately $5.9 billion of financial commitments from Global Infrastructure Partners (GIP), GIC, Mubadala Investment Co. (collectively the Financial Investors) and TotalEnergies.
Under the JV agreement executed, NextDecade will hold equity interests that entitles the company to receive up to 20.8% of the cash flows generated by Phase 1 during operations. Financial Investors will hold equity interests that entitle them to a minimum of 62.5% of the cash flows generated by Phase 1 during operations and TotalEnergies will be entitled to 16.7%.
NextDecade also said it had committed to invest approximately $283 million in Phase 1, including $125 million of pre-FID capital investments for Phase 1. The company also closed senior secured non-recourse bank credit facilities of $11.6 billion as well as a $700 million senior secured non-recourse private placement notes offering.
Of Phase 1’s nameplate liquefaction capacity of 17.6 mtpa, NextDecade said it had long-term binding LNG sale and purchase agreements for 16.2 mtpa with TotalEnergies, Shell NA LNG LLC,
The Rio Grande LNG proposal
NextDecade’s export facility is situated on a 984-acre site on the banks of a deepwater channel. The project is more than a decade in the making – the company was founded in 2010 and Brownsville was actually their second location goal – and continued beyond the tragic death of their founder and chair, Kathleen Eisbrenner, in 2019.
Galveston-area Pelican Island was actually NextDecade’s first proposed LNG project.
NextDecade, through its wholly owned subsidiaries Rio Grande LNG and NEXT Carbon Solutions, aims to develop the RGLNG facility together with one of the largest planned carbon capture and storage (CCS) projects in North America, the company said on its website. NextDecade looks to deploy its proprietary processes to lower CCS-related costs and reduce CO2 emissions at their industrial-scale facilities.
RGLNG will be the first and only U.S. LNG project to offer CO2 emissions reductions of over 90% via planned CCS which will capture and permanently store over 5 million metric tonnes of CO2 per year, the equivalent to removing over one million vehicles from the road annually, according to NextDecade.
When RGLNG is fully completed, the export facility will generate sufficient energy to satisfy the annual heating requirements of some 20 million households, which is equivalent to the total number of households in New York and California combined, NextDecade said.
Financial Investors and TotalEnergies both have options to invest in RGLNG Train 4 and Train 5 equity. And both companies have options to invest in the planned RGLNG CCS project. TotalEnergies’ option to invest in Train 4 and Train 5 is conditioned on exercising LNG purchase rights for 1.5 mtpa in each of the trains.
Project opposition remains
Objection to the RGLNG project remains strong since it is on lands that are sacred to the Carrizo Comecrudo Tribe of Texas, Washington, D.C.-based Sierra Club said July 11 in a press release.
Two groups have filed two federal lawsuits challenging the decision by the Federal Energy Regulatory Commission (FERC) to approve two LNG export terminals, including Texas LNG, Rio Grande LNG and the associated Rio Bravo Pipeline
The lawsuits were filed in the U.S. Court of Appeals for the D.C. Circuit by the Sierra Club, the Carrizo Comecrudo Tribe of Texas and the city of Port Isabel, Texas.
“This is an unfathomable blow to the surrounding community, which has been opposed to the creation of any LNG terminals for years. There will be no prosperity from this project for local residents, just pollution and the destruction of sacred sites and wildlife habitats,” Brownsville Sierra Club Organizer Emma Guevara told Hart Energy on July 12. “These projects should have never been approved. And FERC has not properly analyzed their environmental impacts.”
In its July 12 investor presentation, NextDecade said it was committed to invest significantly in the Rio Grande Valley community. The company said it plans to educate current and future generations, mitigate impacts to wetlands and wildlife and reduce CO2 to from the RGLNG project through its planned CCS project.
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