US regulators issue key permits for Rio Grande, Commonwealth LNG projects

The developers of the Rio Grande LNG and Commonwealth LNG export projects received key authorizations from US energy regulators late on Aug. 29, bringing both closer to their goals of reaching final investment decisions on new liquefaction capacity in 2025.

Rio Grande developer NextDecade secured an order on remand from the US Federal Energy Regulatory Commission that upheld its authorization for the project, a year after an adverse ruling from a US appeals court returned a prior approval to the regulator for further review.

The Aug. 29 order -- which came about three month ahead of a previously scheduled release date -- marked a major win for the developer as it targets FID on a proposed two-train expansion by Sept. 15 that would bring Rio Grande's production capacity to about 27 million mt/year.

The pricing validity for each train under the developers' engineering, procurement and construction contracts extends through that date, meaning a delayed FID could expose the developer to higher project costs.

The regulatory win for Commonwealth LNG came from the US Department of Energy, which granted the project a final authorization to export LNG from the project to countries that lack free trade agreements with the US.

The developer of the project, which has a peak permitted capacity of 9.5 million mt/year, received a conditional permit from the DOE in February that showed regulatory support but stopped short of authorizing exports to the countries that make up most of the global LNG import market.

Commonwealth owner Kimmeridge is targeting an FID on the project by the end of 2025, although Kimmeridge Managing Partner Ben Dell said in a March interview that a decision could come as soon as September. The developer recently sought FERC approval to start initial site preparation by Sept. 19.

"We are glad to do our part in Commonwealth's recent progress toward its final investment decision and look forward to its contribution to our nation's success," the DOE's Tala Goudarzi, principal deputy assistant secretary for the agency's fossil energy office, said in a statement.

Both of the LNG developers have built significant commercial support for their projects in recent months.

Commonwealth has announced binding long-term supply agreements tied to the project that cover about 4 million mt/year of production. Offtakers include JERA, Malaysia's Petronas and commodities trader Glencore. Glencore has also agreed to buy natural gas supply from Kimmeridge's upstream business under a netback agreement at international prices.

Commonwealth did not immediately respond to a request for comment.

NextDecade has said it already has sufficient commercial support to build Train 4 after securing binding long-term deals covering a total 4.6 million mt/year of supply. Offtakers include Saudi Aramco, the UAE's ADNOC and France's TotalEnergies.

NextDecade in June also signed an offtake deal with Japan's JERA for 2 million mt/year tied to Train 5. TotalEnergies has another option for 1.5 million mt/year from Train 5.

NextDecade did not immediately respond to a request for comment.

Regulatory certainty

The FERC order marks a major regulatory advance for the Rio Grande project, despite the fact that construction is already underway on the initial 17.6 million mt/year project.

The US Court of Appeals for the District of Columbia Circuit twice remanded FERC's authorizing decisions for the project. In August 2024, the court faulted FERC's analysis of environmental justice and its consideration of a carbon capture and sequestration project at Rio Grande that developer NextDecade has since withdrawn. The court also found FERC failed to explain why it chose not to consider air quality data from a nearby monitor.

Over continued objections from environmental groups, FERC continued to support its prior findings, and it backed its prior conclusion that the Rio Bravo Pipeline was needed.

The three sitting FERC members approved the Rio Grande project, with conditions imposed by the commission's order.

The commission cited a recent Supreme Court ruling on National Environmental Policy Act rulings to argue that FERC is entitled to substantial deference in its choice of method to evaluate air quality impacts.

Additionally, it said two Trump executive orders meant FERC was not obligated to assess disproportionate environmental justice communities. FERC said it reviewed impacts on "all affected communities."

DOE order

The DOE's order on Commonwealth LNG authorizes exports from the project to non-free trade agreement nations through 2050. The department said it was relying on a categorical exclusion from preparing an environmental impact statement or an environmental assessment under NEPA. In doing so, it cited a December 2020 categorical exclusion for gas exports and associated transportation by marine vessel.

Three US projects have reached FID so far in 2025 -- Woodside's 16.5 million mt/year Louisiana LNG project, a roughly 5 million mt/year expansion of Cheniere's Corpus Christi LNG project, and the first 14.4 million mt/year phase of Venture Global's CP2 LNG export project in Louisiana.

The next wave of US LNG buildout is taking shape as global LNG spot prices remain relatively high.

Platts, part of S&P Global Energy, assessed the Gulf Coast Marker for US FOB cargoes loading 30-60 days forward at $9.70/MMBtu on Aug. 29, up 2 cents day over day.