Rio Grande LNG Terminal

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Rio Grande LNG Terminal is an LNG export terminal under construction in Cameron County, Texas, United States.[1]

Location

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Project Details

Trains 1-3 (Phase 1)

  • Operator: Rio Grande LNG LLC[2]
  • Owner: Rio Grande LNG LLC[3]
  • Parent company: NextDecade, TotalEnergies, Global Infrastructure Partners[4]
  • Location: Brownsville, Texas, United States
  • Coordinates: 25.950835, -97.410844 (approximate)
  • Capacity: 17.6 mtpa (5.867 mtpa per train)[5]
  • Status: Construction[1]
  • FID status: FID (2023)[6]
  • Type: Export[7]
  • Trains: 3[8][9]
  • Cost: US$18.4 billion (Phase 1, Trains 1-3)[10]
    • Formerly US$15.7 billion (Trains 1–5 together)[11]
  • Start year: 2027[6]
    • Formerly 2026 (first two trains)[12]
  • Associated infrastructure: Rio Bravo Gas Pipeline[13]

Trains 4–5

  • Operator: Rio Grande LNG LLC[2]
  • Owner: Rio Grande LNG LLC[3]
  • Parent company: NextDecade
  • Location: Brownsville, Texas, United States
  • Coordinates: 25.950835, -97.410844 (approximate)
  • Capacity: 10.8 (5.4 mtpa per train)[8]
  • Status: Proposed, Pre-FID (2024)[7][8][14]
  • Type: Export[7]
  • Trains: 5[8][9]
  • Cost:
    • Formerly US$15.7 billion (Trains 1–5 together)[11]
  • Start year: 2029[14]
  • Associated infrastructure: Rio Bravo Gas Pipeline[13]

Train 6

  • Operator:
  • Owner: Rio Grande LNG LLC[3]
  • Parent company: NextDecade[15]
  • Location: Brownsville, Texas, United States
  • Coordinates: 25.950835, -97.410844 (approximate)
  • Type: Export[16]
  • Trains: 1[16]
  • Capacity: 4.5 mtpa[16]
  • Status: Cancelled[16]
  • Start year:

Background

Rio Grande LNG Terminal is a proposed LNG export terminal in Cameron County, Texas, United States. It was originally planned to have six production trains of 4.5 mtpa, for a total capacity of 27 mtpa.[17] In July 2021, the project promoter, NextDecade, announced that it was reducing the number of trains to 5, while also raising the capacity of each to 5.4 mtpa, maintaining a total capacity of 27 mtpa.[8]

The export terminal would have gas supplied by the Rio Bravo Gas Pipeline, a proposed pipeline project. In June 2015, NextDecade, LLC announced that it had raised an additional US$85 million for the Rio Grande LNG project, securing NextDecade's access to commence construction of the project upon permitting.[18] In May 2016, NextDecade filed an application with the Federal Energy Regulatory Commission to site, construct, and operate both the LNG terminal and the Rio Grande Pipeline. FERC's federal authorization decision deadline is set for July 25, 2019.[19]

In December 2019, the Federal Energy Regulatory Commission (FERC) issued a formal approval for the project. The Commission also approved, with conditions, the Texas LNG Terminal, the Rio Bravo Gas Pipeline, and the Annova LNG Brownsville Terminal, bringing the total number of FERC-approved project in 2019 to eleven. The Rio Grande LNG Terminal and the associated Rio Bravo Gas Pipeline will export 27 million metric tons per annum (mtpa) of natural gas. All three LNG project sponsors have applications pending before the U.S. Department of Energy seeking authorization to export gas to countries without Free Trade Agreements with the United States.[20] In February 2020, the U.S. Department of Energy issued approvals for the three terminals to ship LNG to nations that aren't part of free trade agreements, such as Japan, South Korea and India.[21]

In April 2020, the energy and shipping brokerage Poten & Partners disclosed that the FID for the terminal had been delayed beyond the original FID timing of 2020 to 2021. It cited COVID-19, plunging demand and the crash in oil prices as the reasons for the delay. [22]

In May 2020, NextDecade announced that they would be pushing back the project's FID, citing the coronavirus pandemic lowering demand and prices for liquefied natural gas.[23]

In July 2020, NextDecade announced that instead of building six liquefaction trains the project will proceed with five liquefaction trains. The company said that this will cut costs by reducing construction time and lower expected carbon emissions.[9]

As of April 2021, NextDecade was aiming to take a FID on two trains in 2021, according to S&P Global.[24] An August 2021 investor presentation from NextDecade continued to maintain that FID for an initial two-train, 11 mtpa phase was being targeted before the year's end despite having only secured one contract with Shell for 2 mtpa.[25]

In November 2021, NextDecade submitted a proposal to FERC to incorporate a carbon capture and storage (CCS) system to the project that it said would capture at least 90% of emissions from the previously approved terminal.[26]

In January 2022, NextDecade announced that it was delaying its FID for the project to the second half of 2022.[27]

In September 2022, NextDecade announced a US$85 million private placement — selling that value of common stock to a total of 10 institutional investors — as it looked toward FID on the first three trains.[28]

In October 2022, Rio Grande LNG and Port Arthur LNG Terminal issued limited notices to proceed with construction,[29] and site preparation had begun ahead of FID as of December 2022.[30]

In April 2023, FERC reaffirmed its approval of the Rio Grande LNG Terminal and associated Rio Bravo Gas Pipeline.[31][32]

In June 2023, TotalEnergies bought a 17.5% stake in NextDecade worth US$219 million of shares.[33]

In July 2023, NextDecade reached FID for Phase 1 of the project. The same month, Baker Hughes won a contract from Bechtel to supply compressors for Phase 1.[34]

In October 2023, NextDecade officially began construction on Phase 1 of Rio Grande LNG Terminal.[1]

Contracts

In May 2019, NextDecade awarded contracts worth nearly US$9.6 billion to engineering firm Bechtel for engineering, procurement and construction services to build the first phase of the proposed Rio Grande liquefied natural gas export terminal on the Texas Gulf coast. Bechtel says three production units capable of producing up to 17.6M mt/year of LNG, two storage tanks and two marine berths will be in operation by 2023, if the project secures a federal permit and reaches a positive final investment decision (FID). The contracts are the latest step forward for NextDecade, which also landed a 20-year LNG supply contract with Royal Dutch Shell and pledged to deepen nearly half of the Brownsville Ship Channel to 52 ft.[35]

In November 2020, the French energy company Engie, which is partly owned by the French government, confirmed that it had pulled out of negotiations with NextDecade over a potential 20 year, US$7 billion contract to buy LNG from the proposed Rio Grande export terminal. Engie's decision is thought to have been influenced by French government concerns over the high methane emissions associated with the gas which NextDecade would be sourcing from Texas oil fields such as the Permian Basin for export overseas. Commenting on Engie's confirmation that it would not be proceeding with the deal, Lorette Philippot of Friends of the Earth France said, "The rejection of this contract by the government and Engie is a new explicit recognition of the climatic, environmental and social ravages of shale gas".

The collapse of the Engie deal means that NextDecade has secured only one firm offtake deal for the Rio Grande terminal, a 20 year agreement with Shell to buy 2 mtpa of LNG. To advance the project and reach FID on two or three trains at the terminal, NextDecade has said it still needs to sell another 9 mtpa of LNG under long-term contracts.[36]

In March 2020, NextDecade said it was continuing work to finalize commercial agreements needed to be able to sanction at least two trains at Rio Grande LNG later in the year. It had secured only a single long-term contract for 2 mtpa with Shell.[37]

In March 2022, NextDecade announced a preliminary agreement with Chinese utility Guongdong Energy for the purchase of up to 1.5 mtpa for 20 years. The heads of agreement calls for the companies to arrange a firm sales agreement in Q2 2022.[38]

In April 2022, NextDecade announced a sale and puchase agreement with China's ENN for 1.5 mtpa over 20 years.[39]

In May 2022, NextDecade announced the completion of a 15-year sale and purchase agreement with France's Engie for 1.75 mtpa of LNG. The LNG would come from Rio Grande's first two trains (10.8 mtpa), for which NextDecade anticipates making a FID in the second half of 2022 with commercial operations planned to start in 2026.[12] Commenting on the deal, Rebekah Hinojosa, Gulf Coast Campaign Representative for Sierra Club, said: "The situation has not changed in the two years that Engie had dropped the deal with NextDecade: fracking is still destructive to the climate and if Rio Grande LNG is built it would be the biggest emitter of toxic pollution that threatens public health and the environment in the Rio Grande Valley region. NextDecade’s carbon capture and sequestration plans are a scam that won't reduce Rio Grande LNG's harmful pollution, and does nothing to reduce greenhouse gas emissions when the gas is fracked, produced, exported overseas, and burned. By reviving their deal with Rio Grande LNG, Engie is working against France's climate initiatives while also poisoning our South Texas community."[40]

In July 2022, NextDecade announced a 20-year 1 mtpa sales and purchase agreement (SPA) with China Gas and a 20-year 1 mtpa sales and purchase agreement with Guangdong Energy Group.[41][42] Later that month it announced another 20-year, 1 mtpa deal with Exxon Mobil.[43]

In December 2022, NextDecade signed a 20-year, 1 mtpa SPA with Galp.[44] The same month, NextDecade announced a 20-year, 2-mtpa deal with ENN, adding 0.5 mtpa to the contract the two companies had signed in April 2022.[45]

In January 2023, NextDecade announced an SPA with Itochu Corporation for the sale of 1 mtpa LNG over a 15-year time period.[46]

Financing

In 2017 NextDecade appointed Macquarie Capital and Société Générale as financial advisors for the project after Sumitomo Mitsui Banking Corporation ended its advisory mandate.[47] As of September 2021, and given the project's delayed FID, there were no reported developments on the advisors' efforts to raise financing.

As of December 2022, NextDecade intended to reach FID in early 2023.[48] In February 2023, NextDecade announced intention to sell US$35 million in shares as it moved toward FID.[49]

On 16 March 2023, NextDecade announced that it had amended its agreements with engineering firm Bechtel that would delay FID until at least June 2023.[50]

On 28 March 2023, Société Générale withdrew from the project.[51]

In June 2023, NextDecade moved closer to FID after striking deals with Global Infrastructure Partners and TotalEnergies. Global Infrastructure Partners would become a majority investor in Phase 1 (Trains 1–3) and TotalEnergies would become a 16.67% investor. The agreement also left potential investment open for Trains 4 and 5. The framework also included TotalEnergies purchasing 5.4 mtpa of LNG from Phase 1 for 20 years.[4]

In July 2023, NextDecade took FID for Phase 1 with US$5.9 billion of financial commitments from Global Infrastructure Partners (GIP), GIC, Mubadala, and TotalEnergies.

In September 2023, NextDecade said that it had entered into a credit agreement with a group of lenders for $356 million of senior loans.[52]

Opposition

Following the 2019 FERC approval, opponents filed new lawsuits against the three proposed LNG terminals and one proposed gas pipeline in Brownsville, Texas, the Annova LNG Brownsville Terminal, the Rio Grande LNG Terminal, the Texas LNG Terminal, and the Rio Bravo Gas Pipeline. The three suits were filed by local residents, the city of Port Isabel and the Sierra Club. Local shrimpers and fishermen filed a suit against Rio Grande LNG and the Rio Bravo Pipeline in the U.S. Fifth Circuit Court of Appeals, challenging the U.S. Army Corps of Engineers approval of a water permit for the plant and pipeline. The plaintiffs argue that the Corps failed to avoid or mitigate negative impacts to wetlands.[53]

In another filing, the city of Port Isabel, the Sierra Club and two grassroots organizations filed two lawsuits challenging the FERC’s approval of the Annova LNG and Texas LNG projects. The suits were filed in the U.S. Court of Appeals for D.C. Circuit in Washington, D.C. The suits are asking that the federal permits be reviewed and overturned by a federal judge. The suits argue that FERC's socioeconomic and environmental justice studies were flawed, as was FERC's ruling that the LNG facilities are in the public interest. Those groups have a similar lawsuit filed against FERC’s approval of the Rio Grande LNG and Rio Bravo Pipeline. LNG opponents contend that the LNG facilities in Brownsville would create safety and environmental concerns, impact local fishermen, destroy wetlands, threaten wildlife, and hurt tourism. It would also create air pollution problems in the Rio Grande Valley, an impoverished area largely home to traditionally marginalized communities, disproportionately impacting the Latino community, a potential violation of federal law. Port Isabel, a Brownsville neighbor, is opposed to the LNG project and is also party in a separate lawsuit that is pending in Texas courts.[53]

In April 2020, two environmental groups sued the U.S. Fish and Wildlife Service (FWS) over their approval of the Annova LNG Brownsville Terminal. The Sierra Club and Defenders for Wildlife sued the FWS in 5th Circuit U.S. Court of Appeals, asking the court to review whether the agency violated the Endangered Species Act (ESA) when deciding that the planned construction would not threaten the survival of the medium-sized wildcat, thought to number only about 60 specimens in the United States.[54] A similar suit has been brought against the Rio Grande LNG Terminal.[55]

In August 2021, the U.S. Court of Appeals for the District of Columbia Circuit issued a ruling that found problems with FERC's climate and environmental reviews for the Rio Grande LNG export project as well as the Texas LNG Terminal project. The court found that FERC did not go far enough in considering environmental justice and climate impacts in their approval of the two gas infrastructure projects. The federal appeals court remanded the orders authorising the projects but did not vacate them, finding that FERC "is likely to remedy any deficiencies" of its previous ruling on the projects when it reviews them on remand. The promoters of Rio Grande LNG and Texas LNG reacted to the ruling by suggesting that it will likely not end the commercial development of the facilities.[56]

In February 2023, The Guardian reported on further environmental opposition to Rio Grande LNG Terminal. NextDecade's proposal for CCS in the facility since 2021, and the claim that it will be the "greenest LNG project in the world", sparked heated opposition from the local community in Port Isabel.[57]

In April 2023, members of the Carrizo/Comecrudo Tribe of Texas gathered to voice concerns over the terminal and nearby SpaceX projects.[58]

In July 2023, a group led by the Sierra Club filed a lawsuit challenging FERC's decision earlier that year to reaffirm its approval of the project.[59]

Articles and resources

References

  1. ↑ 1.0 1.1 1.2 Offshore Energy. WATCH: NextDecade breaks ground on Rio Grande LNG. October 5, 2023.
  2. ↑ 2.0 2.1 U.S. Liquefaction Capacity. EIA. Accessed May 2022.
  3. ↑ 3.0 3.1 3.2 "Rio Grande LNG LLC - Dkt. No. 15-190-LNG". Energy.gov. Retrieved 2022-05-16.
  4. ↑ 4.0 4.1 "https://lngprime.com/europe/nextdecade-moves-closer-to-rio-grande-lng-fid-after-deals-with-totalenergies-and-gip/83818/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  5. ↑ "https://lngprime.com/americas/nextdecade-takes-rio-grande-lng-fid/85994/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  6. ↑ 6.0 6.1 Oil and Gas Journal. Rio Grande LNG takes FID targeting 2027 commissioning. July 13, 2023.
  7. ↑ 7.0 7.1 7.2 U.S. Liquefaction Capacity, Energy Information Administration, November 3, 2020
  8. ↑ 8.0 8.1 8.2 8.3 8.4 "Corporate Presentation, July 2021". NextDecade. July 2021. Archived from the original on 2021-07-12. Retrieved 2021-07-12.
  9. ↑ 9.0 9.1 9.2 Carl Surran, "NextDecade's Rio Grande LNG to cut costs by using five trains, not six", Jul. 14, 2020
  10. ↑ "Borderlands: $18B LNG export terminal project moves forward at Texas seaport". Yahoo Finance. Retrieved 2023-08-31.
  11. ↑ 11.0 11.1 "NextDecade delays Rio Grande LNG decision until second half". Reuters. Retrieved 2022-11-08.
  12. ↑ 12.0 12.1 NextDecade and ENGIE Execute 1.75 MTPA LNG Sale and Purchase Agreement, Business Wire, May 2, 2022
  13. ↑ 13.0 13.1 Rio Grande LNG Fact Sheet. NextDecade. Accessed May 2022.
  14. ↑ 14.0 14.1 Sierra Club. US LNG Export Tracker. Accessed October 2023.
  15. ↑ Rio Grande LNG. NextDecade. Accessed May 2022.
  16. ↑ 16.0 16.1 16.2 16.3 NextDecade cuts Rio Grande LNG to five trains Oil and Gas Journal, July 15, 2020
  17. ↑ Rio Grande Export Terminal LNG Project, A Barrel Full, 9 November 2015
  18. ↑ NextDecade Raises Additional $85 million in Pre-FID Funding for its Rio Grande LNG Project, Makes Significant Progress with FERC, Next Decade, 15 June 2015
  19. ↑ Rio Grande LNG - Project Overview, Rio Grande LNG, accessed 26 June 2017
  20. ↑ FERC Approves Four LNG Export Projects Federal Energy Regulatory Commission, November 21, 2019
  21. ↑ Four LNG projects along Texas coast land non-FTA export permits Houston Chronicle, Feb. 11, 2020
  22. ↑ John Snyder, FID’s delayed by global uncertainty Riviera Maritime Media, Apr. 24, 2020
  23. ↑ Sergio Chapa, NextDecade pushes back financial decision on Rio Grande LNG Houston Chronicle, May 18, 2020
  24. ↑ Corey, Paul (April 5, 2021). "LNG Project Tracker: Commercial talks pick up as field of developers shrinks". S&P Global Market Intelligence.{{cite web}}: CS1 maint: url-status (link)
  25. ↑ Caroline Evans, 'Return of North American LNG FIDs' Seen in 2022 — LNG Spotlight, Natural Gas Intelligence, Sep. 17, 2021
  26. ↑ Weber, Maya (2021-11-18). "Rio Grande LNG seeks FERC nod to add carbon capture to project". www.spglobal.com. Retrieved 2021-11-19.
  27. ↑ Weber, Harry. Rio Grande LNG project final investment decision delayed to second half of 2022. S&P Global. January 3, 2022.
  28. ↑ "https://lngprime.com/americas/nextdecade-to-raise-85-million-via-private-placement/61650/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  29. ↑ "https://www.bloomberg.com/news/articles/2022-10-25/two-us-lng-plants-are-starting-construction-as-world-hungers-for-gas". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  30. ↑ "https://lngprime.com/americas/nextdecade-bechtel-preparing-rio-grande-lng-site-ahead-of-fid/67916/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  31. ↑ "https://lngprime.com/americas/nextdecade-gets-ok-from-us-ferc-for-rio-grande-lng/79650/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  32. ↑ "https://news.bloombergtax.com/international-trade/lng-terminals-equity-advocates-tried-to-block-okd-by-regulators". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  33. ↑ "https://www.reuters.com/markets/deals/totalenergies-buy-219-mln-stake-lng-developer-nextdecade-2023-06-14". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  34. ↑ "https://lngprime.com/americas/baker-hughes-clinches-rio-grande-lng-gig/85535/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  35. ↑ Carl Surran,Bechtel wins $9.6B in construction work for NextDecade's Rio Grande LNG Seeking Alpha, May 28, 2019
  36. ↑ Stuart Elliott, Harry Weber, France's Engie pulls out of talks for US LNG import deal with NextDecade: company, S&P Global, Nov. 3, 2020
  37. ↑ Harry Weber, Annova LNG discontinuing US export project: operator, S&P Global, Mar. 22, 2021
  38. ↑ Weber, Harry. NextDecade deal with Chinese utility lifts Rio Grande LNG commercial momentum. S&P Global. March 28, 2022.
  39. ↑ Weber, Harry (2022-04-06). "NextDecade's proposed Rio Grande LNG to supply 1.5 mil mt/year to China's ENN". www.spglobal.com. Retrieved 2022-05-03.
  40. ↑ French Firm Engie's Deal With Rio Grande LNG Contradicts Climate Concerns, Locks France Into Fracked Gas Until 2041, Sierra Club press release, May 2, 2022
  41. ↑ NextDecade Announces 1.0 MTPA LNG Sale and Purchase Agreement With China Gas. NextDecade. July 5, 2022.
  42. ↑ NextDecade Announces 1.0 MTPA LNG Sale and Purchase Agreement With Guangdong Energy Group. NextDecade. July 6, 2022.
  43. ↑ NextDecade signs 20-year LNG supply contract with Exxon Mobil. Reuters. July 27, 2022.
  44. ↑ Business Wire. NextDecade and Galp Execute 1.0 MTPA LNG Sale and Purchase Agreement. December 20, 2022.
  45. ↑ LNG Prime Staff (2022-12-27). "China's ENN to buy more US LNG from NextDecade". LNG Prime. Retrieved 2023-08-31.
  46. ↑ LNG Global. NextDecade Corporation signs 15-year LNG supply agreement with Itochu Corporation. January 19, 2023.
  47. ↑ "Rio Grande Valley: At Risk from Fracked-Gas Export Terminals", Rainforest Action Network, Save RGV from LNG, Sierra Club, Les Amis de la Terre, July 2019
  48. ↑ "https://www.valleycentral.com/news/local-news/nextdecade-may-soon-make-final-investment-decision-on-rio-grande-lng/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  49. ↑ "https://lngprime.com/lng-terminals/nextdecade-sells-stock-ahead-of-rio-grande-lng-fid/72976/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  50. ↑ "https://www.naturalgasintel.com/nextdecade-indicates-rio-grande-lng-fid-by-mid-year-extends-construction-agreements/". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  51. ↑ "French bank Société Générale withdraws from Rio Grande LNG project in South Texas". TPR. 2023-03-28. Retrieved 2023-04-06.
  52. ↑ LNG Prime Staff (2023-09-21). "NextDecade gets $356 million loan for Rio Grande LNG". LNG Prime. Retrieved 2023-10-05.
  53. ↑ 53.0 53.1 Three lawsuits filed against Brownsville LNG projects Kallanish Energy, March 31, 2020
  54. ↑ Sebastien Malo, IN BRIEF: Green groups challenge approval of Texas gas terminal citing rare wildcat Reuters, April 20, 2020
  55. ↑ Sebastien Malo, Environmental groups target species authorizations for Brownsville LNG projects, S&P Global, Apr. 21, 2020
  56. ↑ Catherine Morehouse, DC Circuit orders FERC to analyze climate, environmental justice more thoroughly, Utility Dive, Aug. 4, 2021
  57. ↑ "https://www.theguardian.com/environment/2023/feb/03/carbon-capture-gas-exports-rio-grande-lng-nextdecade". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  58. ↑ "https://www.valleycentral.com/news/local-news/native-american-tribe-voices-concern-over-lng-project". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)
  59. ↑ "https://www.naturalgasintel.com/rio-grande-texas-lng-opponents-again-file-lawsuit-challenging-project-authorizations". {{cite web}}: External link in |title= (help)CS1 maint: url-status (link)

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