The third quarter (of 2023) was transformational for NextDecade, as we achieved a positive final investment (FID) decision and issued notice to proceed to Bechtel for Phase 1 at the Rio Grande LNG Facility, marking a new era in the Company’s history, the transition from development to construction and ultimately production of LNG that will enable us to provide a cleaner source of energy to customers around the world.
Making a positive FID and issuing the notice to proceed on Phase 1 was a landmark achievement for us, and I’d like to thank everyone who helped make this a reality. I especially want to thank the incredible employees at NextDecade, our shareholders, equity partners, customers, construction partners, equipment suppliers, the Rio Grande Valley community, the Port of Brownsville and the countless leaders and officials at the local, state, and federal levels. We are now focused on working with our EPC partner, Bechtel, to complete Trains 1, 2, and 3 safely, on time, and on budget.
We are also focused on commercializing and achieving a positive FID for Train 4 in the second half of 2024, and subsequently progressing Train 5. We expect these FERC approved expansions to benefit from our Phase 1 equity partners’ options to participate in Train 4 and Train 5, and TotalEnergies’ LNG offtake options for 1.5 MTPA per train. Construction of Train 4 and Train 5 should be advantaged due to the common facilities and full site preparation included in the Phase 1 EPC contracts, as well as potential labor optimization with a timely Train 4 FID. We continue to experience a strong LNG market and contracting dynamics, and we are confident in our ability to progress toward FID of our expansion capacity.
NextDecade is committed to providing economically competitive LNG to customers around the world and promoting emissions reduction, energy security, and energy affordability. We have taken significant steps toward our goals this quarter and look forward to continuing our momentum in the coming quarters.
Editor's Note: The above commentary was penned by Matt Schatzman, chairman and CEO of NextDecade. The commentary first appeared on NextDecade's website.
Editor's Note: The information below, about the Rio Grande LNG project at the Port of Brownsville, was also posted on NextDecade's website:
NextDecade is constructing and developing the Rio Grande LNG Facility on the north shore of the Brownsville Ship Channel in south Texas through its partially owned subsidiary Rio Grande. The site is located on 984 acres of land which has been leased long-term and includes 15,000 feet of frontage on the Brownsville Ship Channel. The Rio Grande LNG Facility has received necessary approvals and authorizations required for construction, including those from the Federal Energy Regulatory Commission (FERC), which allow for development, construction, and operation of up to five trains and 27 MTPA of LNG exports.
Phase 1 (Trains 1-3)
Phase 1 at the Rio Grande LNG Facility is under construction. Phase 1 includes three liquefaction trains with a total nameplate capacity of 17.61 mtpa, two 180,000 cubic meter full containment LNG storage tanks, two jetty berthing structures designed to load LNG carriers up to 216,000 cubic meters in capacity, and associated site infrastructure and common facilities including feed gas pretreatment facilities, electric and water utilities, two totally enclosed ground flares for the LNG tanks and marine facilities, two ground flares for the liquefaction trains, roads, levees surrounding the entire site, and warehouses, administrative, operations control room, and maintenance buildings.
As of September 2023, progress on Trains 1 through 3 is in line with the schedule under the EPC contracts.
Final Investment Decision on Train 4 and Train 5
NextDecade is targeting a positive FID and commencement of construction of Train 4 and related infrastructure at the Rio Grande LNG Facility in the second half of 2024, and subsequently Train 5 and related infrastructure. Achieving a positive FID of this FERC approved expansion capacity at the Rio Grande LNG Facility will be subject to, among other things, finalizing and entering into EPC contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure.
In connection with consummating the Phase 1 equity joint venture, the Company’s equity partners each have options to invest in Train 4 and Train 5 equity, which would provide approximately 60% of the estimated equity funding required for each of Train 4 and Train 5. Inclusive of these options, NextDecade currently expects to fund 40% of the equity commitments for each of Train 4 and Train 5, and to have an initial economic interest of 40% in each of Train 4 and Train 5, increasing to 60% after its equity partners achieve certain returns on their investments in each of the respective trains.
TotalEnergies has LNG purchase options of 1.5 MTPA for each of Train 4 and Train 5. If TotalEnergies exercises its LNG purchase options, the Company currently estimates that an additional approximately 3 MTPA must be contracted on a long-term basis for each of Train 4 and Train 5 prior to making a positive FID for the respective train.
The Company has commenced certain pre-FID activities for Train 4, including the FEED and EPC contract processes with Bechtel.
