NextDecade Corp. has made a positive final investment decision (FID) to build the first three liquefaction trains (Phase 1) at its 27-million tonne/year (tpy) Rio Grande LNG (RGLNG) plant in Brownsville, Tex. In conjunction with FID, RGLNG issued the notice to proceed with Phase 1 construction to Bechtel Energy Inc. under its lump-sum turnkey engineering, procurement, and construction contract (EPC).
Phase 1, with nameplate liquefaction capacity of 17.6 million tpy, has 16.2 million tpy of long-term binding LNG sale and purchase agreements with TotalEnergies SE, Shell NA LNG LLC, ENN LNG Pte. Ltd., Engie SA, ExxonMobil LNG Asia Pacific, Guangdong Energy Group, China Gas Hongda Energy Trading Co., Galp Trading SA, and Itochu Corp. It is expected to be commissioned in 2027.
“This project gives TotalEnergies access to competitive LNG thanks to its low production costs,” said Patrick Pouyanné, chairman and chief executive officer of TotalEnergies. “LNG from this first phase will boost TotalEnergies US LNG export capacity to over 15 million tpy by 2030, and thus our ability to contribute to European gas security, and to provide customers in Asia with an alternative form of energy that is half as emissive as coal.”
The company will offtake 5.4 million tpy from RGLNG Phase 1 for 20 years. TotalEnergies also has a production stake Cameron LNG Train 4 (OGJ Online, Apr. 11, 2022) and medium- or long-term supply agreements with Cove Point LNG, Sabine Pass LNG, and Freeport LNG.
Phase 1 is being developed with $18.4 billion of project financing, $12 billion of which is EPC cost. In addition to taking FID, NextDecade executed a joint venture agreement which included about $5.9 billion of commitments from financial investors Global Infrastructure Partners (GIP), GIC Pte. Ltd., Mubadala Investment Co. (Mubadala), and TotalEnergies. These funds will cover owner’s costs and contingencies of about $2.3 billion; dredging for the Brazos Island Harbor Channel Improvement Project, conservation of more than 4,000 acres of wetland and wildlife habitat area and installation of utilities at a cost of $600 million; and interest during construction and other financing costs of roughly $3.1 billion.
Under the joint venture agreement, NextDecade will hold equity interests entitling it to receive up to 20.8% of the cash flows generated by Phase 1 during operations. The financial investors and TotalEnergies will hold equity interests that entitle them to a minimum of 62.5% and 16.7% of the cash flows generated by Phase 1 during operations, respectively.
The financial investors and TotalEnergies each have options to invest in RGLNG Train 4 and Train 5 equity, and options to invest in the planned carbon capture and sequestration project at RGLNG (OGJ Online, Apr. 16, 2021). TotalEnergies’ right to invest in Train 4 and Train 5 is conditioned on exercising its LNG purchase rights of 1.5 million tpy in each train. By end-2023 TotalEnergies also will hold a total 17.5% stake in NextDecade itself.