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NextDecade aims for FID this year, but issues warning
TEXAS
US LNG developer NextDecade has provided US securities regulators with an update ahead of the release of its delayed quarterly earnings report, which is being pushed back to around May 18 from the original deadline of May 11. While the company said that it was still targeting a final investment decision (FID) on the Rio Grande LNG project in South Texas this year, it noted that the timing could be affected by the impact of the coronavirus (COVID-19) pandemic.
In a May 8 securities filing, NextDecade added a COVID-19 risk factor in order to comply with federal guidance. This risk factor describes the possible impacts of the pandemic on its busi- ness, including a delay to the timing of the FID on Rio Grande LNG. However, a NextDecade spokesperson, Toni Beck, told Reuters that the filing did not constitute an update on the tim- ing of the FID. This suggests that the company still hopes to reach FID in line with its previous schedule after all, but is proceeding cautiously as market conditions deteriorate.
“Prospects for the development and financing
of the [Rio Grande] terminal are based in part on factors, including global economic conditions that have been, and are likely to continue to be, adversely affected by the COVID-19 pandemic,” the company said in its filing.
“This macro-economic disruption may disrupt our ability to raise additional capital to finance our operations in the future, which could materially and adversely affect our business, financial condition and prospects, and could ultimately cause our business to fail,” it added.
If the company does announce an FID on the Rio Grande terminal this year, the facility would enter service in 2023. NextDecade has con- tracted engineering firm Bechtel to build either two liquefaction trains for the project at a cost of $7.0bn, or three trains for $9.6bn. Each train would have a capacity of 5.87mn tonnes per year (tpy) of LNG.
The warning comes after another LNG devel- oper, Sempra Energy, last week delayed an FID on its Port Arthur LNG project, also in Texas, until 2021.
Regulator issues Texas LNG permit with stricter than usual standards
TEXAS
Texas LNG is one of three export terminals proposed for the Port of Brownsville.
TEXAS LNG has received a state permit for its proposed export terminal at the Port of Browns- ville in South Texas, with stricter air pollution standards than normally expected for the region. However, this is not the only LNG facility in the state that the Texas Commission on Environmen- tal Quality (TCEQ) requires to have stricter air pollution standards. The tougher standards also apply to the operational Freeport LNG terminal south of Houston, as well as the proposed Rio Grande LNG project, which would also be built at the Port of Brownsville. (See previous story)
The TCEQ air pollution permit authorises Texas LNG to build its proposed export terminal and produce up to 4mn tonnes per year (tpy) of LNG, but imposes tougher rules than normal on the project’s hot oil heater and oxidisers. Texas LNG has agreed to the tougher standards.
Texas LNG and Rio Grande LNG, along with the Annova LNG project, which has also been proposed for the same area at the Port of Brownsville, have been in the spotlight owing to local concerns about their impact on the envi- ronment and wildlife. However, regulators have
found that the risks of the projects can be mit- igated. The projects could yet find themselves delayed if litigation against them is successful, but the projects’ developers have been trying to demonstrate that they are taking sufficient steps to minimise the environmental impact of their planned facilities.
“Texas LNG is committed to operating in an environmentally responsible manner, including use of electric motors instead of conventional gas turbine compressors to minimise air emissions, making the facility one of the world’s cleanest LNG liquefaction plants,” Texas LNG’s chief oper- ating officer, Langtry Meyer, said in a statement.
Texas LNG touts the strengths of its project as including access to low-cost, abundant feed gas from the Permian Basin, as well as the use of third-party pipeline infrastructure, a modular construction design and a “transparent, compet- itive” pricing structure. However, the project is inching forward as the world grapples with an oversupply of LNG that may deter developers from making final investment decisions (FIDs) on new liquefaction capacity anytime soon.
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