NextDecade Sees Risk for All Federally Permitted Infrastructure in Rio Grande Case — Three Things to Know About the LNG Market

By Jamison Cocklin

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NO. 1: NextDecade Corp. CEO Matt Schatzman said this week that the U.S. Court of Appeals for the District of Columbia Circuit’s decision vacating FERC authorization for its Rio Grande LNG project sets a dangerous precedent. The company, he said, is prepared to take “any and all available legal and regulatory actions” to ensure the project isn’t delayed.

Image of Rio Grande LNG complex

“The decision reached by the DC Circuit Court has far-reaching implications,” Schatzman said in the company’s second quarter earnings release. “If the ruling stands, the precedent that would be set by the court’s action has the potential to impact viability of all federally permitted infrastructure projects because it will be difficult for these projects to attract capital investments until they receive final unappealable permits.”

The court sent the Rio Grande and Texas liquefied natural gas projects’ authorizations back to the Federal Energy Regulatory Commission for further consideration of the projects’ environmental impacts, which could create lengthy delays for the projects.

Schatzman reiterated that construction of the first 17.6 million metric tons/year (mmty) phase of Rio Grande, which was sanctioned last year, continues. It consists of three trains, all of which are currently on schedule. Engineering, procurement and construction work on the first two trains is 24.1% complete, the company said. Work on the third train is 7.8% complete. The company also continues to work toward sanctioning two more liquefaction trains at the South Texas site.

NO. 2: U.S. LNG developers have signed more supply contracts after a slow start to the year. According to Tudor, Pickering, Holt & Co. (TPH), U.S. projects have secured 12.6 mmty of new contracts since the end of May, bringing the year-to-date total to 16.8 mmty.

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The contracts, TPH said, are spread across eight facilities, with the second phase of Port Arthur LNG, Texas LNG and Rio Grande Train 4 leading the way.

“Unlike prior years, most of the contracts in 2024 were signed by upstream U.S. and international producers,” said TPH analyst Zack Van Everen in a note to clients. Aethon Energy Management LLC, Chesapeake Energy Corp., EQT Corp., ExxonMobil and Saudi Aramco have all signed up to take 11.9 mmty of the 16.8 mmty so far this year.

Van Everen also noted that most of the deals, or 15.1 mmty, are tentative heads of agreements that must still be finalized.

NO. 3: Germany issued an arrest warrant in June for a Ukrainian man’s alleged role in blowing up the Nord Stream pipeline in September 2022, according to news media reports.

The suspect was identified only as Volodymyr Z. in line with German privacy laws. He was thought to be living in Poland at the time the warrant was issued, but he allegedly fled the country for Ukraine.

The sabotage stoked widespread speculation and has become a mystery in the war between Ukraine and Russia. When the 6 Bcf/d, 745-mile Nord Stream system was destroyed, Russia had throttled back natural gas deliveries to Europe on the pipeline to 20% of capacity as it cut off exports to the continent.

However, the explosion exacerbated the energy crisis in Europe. The Wall Street Journal, citing unnamed sources, reported Thursday that a group of Ukranians, including civilian divers, was responsible for the explosion. It remains unclear who ordered the operation.

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Jamison Cocklin

Jamison Cocklin joined the staff of NGI in November 2013 to cover the Appalachian Basin. He was appointed Senior Editor, LNG in October 2019, and then to Managing Editor, LNG in February 2024. Prior to joining NGI, he worked as a business and energy reporter at the Youngstown Vindicator, covering the regional economy and the Utica Shale play. He also served as a city reporter at the Bangor Daily News and did freelance work for the Associated Press. He has a bachelor's degree in journalism and political science from the University of Maine.