NextDecade Corp. late Wednesday reached a final investment decision (FID) and is beginning construction of the first phase for the Rio Grande LNG (RGLNG) facility in deep South Texas near the Mexico border.
The Houston-based company secured $18.4 billion for the 17.6 million metric ton/year (mmty) first phase, making it the largest greenfield energy project financing in U.S. history, according to the company.
CEO Matt Schatzman said sanctioning the project is a “landmark event” that has been years in the making. Rio Grande has been in development for at least eight years.
“Now our focus turns to safely constructing Phase 1 on time and on budget and progressing commercial negotiations on RGLNG Train 4 and Train 5 to further expand our LNG platform and grow NextDecade shareholder value,” Schatzman said.
Rio Grande LNG is the third U.S. export project to be sanctioned this year, following Port Arthur LNG southeast of Houston, and the second phase of Plaquemines LNG in Louisiana.
Rio Grande had teased before the Fourth of July holiday that it had enough commitments from an international consortium of banks to announce an FID by mid-month.
Overall, the export facility in Brownsville, TX, is designed to have 27 mmty nameplate capacity with five trains at full build-out. It could also incorporate a carbon capture, storage and sequestration project, which would be commercialized separately.
Capital expenditures for construction and other related costs including dredging and wetland conservation are estimated at $14.8 billion.
Along with the contractor notice to proceed to Bechtel Corp., the FID also solidifies equity agreements with Global Infrastructure Partners and TotalEnergies. The two companies agreed to contribute a combined $5.9 billion of the project’s financial commitments.
NextDecade has 16.2 mmty in Phase 1, or around 92% of the initial nameplate capacity, under contract. Around 31% of the contracted cargoes would be sent to Asian markets, while 17% are destined for Europe, according to Tudor, Pickering, Holt and Co.
TotalEnergies agreed to take 5.4 mmty from the first phase for 20 years, which is about 52% of contracted supply. TotalEnergies CEO Patrick Pouyanné said the investment would help to meet the needs of Atlantic and Pacific market customers.
“LNG from this first phase will boost TotalEnergies U.S. LNG export capacity to over 15 mmty 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,” Pouyanné said.
As a part of its agreements, NextDecade has also offered investors equity rights in the next two trains and up to 1.5 mmty of additional offtake.
