NextDecade terminates plans for proposed second LNG export facility in Texas

Houston — NextDecade abandoned plans Jan. 29 for a second LNG export terminal in Texas, saying the site it was considering was not suitable for development.

The decision regarding a potential terminal in Texas City, near Galveston, has no impact on ongoing development of the proposed Rio Grande LNG export facility in Brownsville, in South Texas, NextDecade said.

The company had previously targeted a final investment decision for the up to 27 million mt/year Rio Grande LNG project in 2021. The timing has been delayed several times, amid challenges securing sufficient long-term supply deals to support construction.

In 2018, NextDecade pitched a second terminal on Galveston Bay, south of Houston, along with a header pipeline. The project, at that time, officially entered the pre-filing review process at the Federal Energy Regulatory Commission.

The company said at the time that it hoped to give itself another platform for exports close to US Gulf Coast pipeline infrastructure if future supply and demand lived up to its expectations. The region's booming production of low-cost natural gas offers an opportunity to supply higher-price Asian markets.

The second terminal was proposed to be built on the Texas City Ship Channel at Shoal Point. As originally conceived, it would have entailed three LNG trains of 5.5 million mt/year each, four LNG storage tanks, two marine jetties and one turning basin. It also was to include a 42-inch-diameter, 97-mile header system pipeline from the Katy Hub to the LNG terminal or an alternative straight-line route of about 82 miles.

In a statement, NextDecade said that after completing its evaluation of the site, it has determined that it is not suitable for development of an LNG facility and related infrastructure and utilities. It said the US Army Corps of Engineers has advised that a portion of the Galveston Bay LNG site is under a special navigation designation that would require a request that Congress remove the designation.

"On account of the potential for prolonged uncertainty around the prospect of release of Federal Navigation Servitude by USACE, NextDecade has elected to forfeit the Galveston Bay LNG site and will no longer make lease payments to the site's landholders, the Texas General Land Office and the City of Texas City," the developer said. "Additionally, NextDecade has informed the Federal Energy Regulatory Commission of its intent to withdraw Galveston Bay LNG from FERC pre-filing proceedings and cease all related activities. The company has also requested that the US Department of Energy terminate its June 2018 authorization for export of LNG from Galveston Bay LNG."

Commercial talks

As for the Rio Grande LNG project, NextDecade has continued to face challenges, largely on the commercial front.

In November 2020, France's Engie halted talks over a potential long-term supply agreement with NextDecade, amid pressure not to import LNG produced from shale gas.

On Jan. 14, officials said plans for a floating storage and regasification unit at the Irish port of Cork will not go ahead after a preliminary deal signed in 2017 with NextDecade expired.

The FSRU could have served as an outlet for up to 3 million mt/year of supply from Rio Grande LNG. When the memorandum of understanding reached with the Irish port was announced, NextDecade said it was in discussions with European energy companies to enter into long-term purchase contracts for delivery of LNG at the port.