NextDecade has awarded a lump sum turnkey engineering, procurement, and construction (EPC) contract to Bechtel Energy for the construction of Train 4 and related infrastructure at the Rio Grande LNG Facility in Brownsville, Texas, but now faces a new hurdle due to a federal court decision. Less than 24 hours after the contract announcement, a D.C. circuit court ruled to vacate the Federal Energy Regulatory Commission’s (FERC) reauthorizations of both Rio Grande and South Texas LNG projects. According to the 6 August filing, the court will remand its decision to FERC for further proceedings.
“For the Rio Grande terminal, the Commission further failed to consider the company’s CCS proposal as part of its environmental review as either a connected action or a project alternative,” the ruling read. “We do not see how the Commission could justify its decision to skip those fundamental procedural steps.”
The ruling also states that the Commission failed to issue a supplemental EIS (environmental impact statement) to account for an updated environmental justice analysis.
South Texas LNG is a proposed 4-mtpa export facility owned and operated by Glenfarne Energy Transition and located at the Port of Brownsville.
“NextDecade is disappointed in the Court’s decision and disagrees with its conclusions,” the company said in a press release late Tuesday. “The company is reviewing the Court’s decision and assessing all of its options. At this time, construction continues on the first three liquefaction trains and related infrastructure (Phase 1) at the Rio Grande LNG Facility, and the company is evaluating the impact of the Court’s decision on the timing of a positive final investment decision (FID) on Train 4.”
NextDecade subsidiary Rio Grande LNG Train 4 said on 5 August it had agreed to pay Bechtel around $4.3 billion for the work under the EPC contract for Train 4. Price validity under the contract extends through 31 December 2024. NextDecade currently projects that owner’s costs, contingencies, financing fees, and interest during construction will total approximately $1.7 to $1.9 billion, based on current estimates and expected interest rates.
Total estimated project costs are expected to be between $6.0 and $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.
Prior to the court ruling, NextDecade aimed to reach FID on Train 4 in the second half of this year, subject to gaining appropriate commercial support and obtaining adequate financing to construct Train 4 and related infrastructure.
In June, Aramco and NextDecade committed to a nonbinding Heads of Agreement for a 20-year liquefied natural gas sale and purchase agreement for offtake from Train 4 at the Rio Grande LNG. Under the terms of the deal, Aramco expects to purchase 1.2 mtpa of LNG for 20 years on a free-on-board (FOB) basis, at a price indexed to Henry Hub.
One month earlier, ADNOC announced the acquisition of a 11.7% stake in Phase 1 (Trains 1–3) of Rio Grande LNG, in addition to entering into a 20-year LNG offtake agreement from RGLNG Train 4. The 20-year LNG offtake agreement is for 1.9 mtpa from Train 4, on a FOB basis at a price indexed to Henry Hub, subject to a positive FID.
Rio Grande LNG is located on a 984-acre site near Brownsville, Texas. Once completed, the facility will have a capacity to handle 27 mtpa of LNG.
