NextDecade gets FERC approval to change design of Rio Grande LNG in Texas

Houston — NextDecade's plan to abandon development of a sixth liquefaction train at its proposed Rio Grande LNG export facility in Texas has been approved by the Federal Energy Regulatory Commission.

The company has said technology would allow it to achieve the same total capacity with five units if it decides to move forward with the full project.

Besides cutting carbon emissions, the move could also reduce construction costs, something developers of new liquefaction terminals on the Gulf Coast have been aggressively trying to do in recent months as they struggle to secure sufficient commercial support to finance the multi-billion dollar facilities. Tellurian will build only one of four proposed pipelines during the first phase of its Driftwood LNG export project if it decides to sanction the Louisiana facility.

The original plan for Rio Grande LNG called for six trains each capable of producing 4.5 million mt/year of LNG. Thanks to engineering optimizations, NextDecade now believes it can achieve an average of 5.4 million mt/year of LNG per train, allowing it to drop a sixth train and reap the same total output.

Cheniere Energy is among existing US LNG exporters that have been able to optimize their trains to be able to liquefy more gas with the units than the volumes that were originally intended.

Staff order

In an Aug. 13 letter to NextDecade, FERC staff approved both the plan to reduce the number of trains by one and the plan to increase the liquefaction capacity of each of the remaining trains, keeping the total maximum export capacity at 27 million mt/year. Related design modifications that would support the changes also won approval.

It's still not certain, however, whether NextDecade will build even five trains, if it moves forward with the project at all.

North American developers of liquefaction capacity were struggling before the coronavirus pandemic to sign long-term offtake contracts covering the supplies they plan to produce. Those challenges have gotten more difficult since then.

Multiple developers of new terminals have delayed FID or stopped providing a target for making a decision.

To date, Shell 's 20-year agreement to buy 2 million mt/year of supply from Rio Grande LNG is the only firm offtake deal tied to the terminal that NextDecade has announced. NextDecade needs to sell another 9 million mt/year of supply under long-term contracts to achieve FID on two or three trains at its site in Brownsville, the developer has said.

Exelon-backed Annova LNG's 6.5 million mt/year project and Texas LNG, expected to include 2 million mt/year of capacity in its first phase, are also proposed to be built in Brownsville. Neither one has reached FID.