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NextDecade calls Sierra Club challenge 'bare attempt to delay' LNG project

LNG export developer NextDecade Corp. pushed back on an effort by the Sierra Club to expand the federal permit review of the company's proposed Rio Grande LNG terminal, calling it "a bare attempt to delay in the eleventh hour the robust four-year regulatory review" by the Federal Energy Regulatory Commission.

The Sierra Club, joined by other environmental groups, argued in a May 30 filing that FERC should weigh possible capacity additions at the facility before giving it the green light. In an accompanying news release, the Sierra Club claimed the developer "misled regulators" about how much natural gas it plans to export.

NextDecade rejected the accusation. "We are aware of the Sierra Club's allegations, which misrepresent the facts pertaining to our Rio Grande LNG project," NextDecade spokesperson Patrick Hughes said in an email. "Our selected technology, Air Products C3MR, is highly efficient and capable of producing more LNG. However, NextDecade has no plans at this time to increase the 27 [million tonnes per annum] of capacity of its Rio Grande LNG project, filings for which are currently in the final stages of FERC review."

The Sierra Club complaint illustrated a reinvigorated effort to quash federal approval of LNG export projects. The group repeatedly lost challenges that targeted FERC authorization of terminal infrastructure and then focused its attention on the U.S. Department of Energy's approvals of licenses to export the fuel to world markets. The DOE authorizations have continued, and FERC has authorized four LNG projects in 2019 after not approving any for about two years.

In NextDecade's case, the advocacy groups pointed to an appendix of a May 5 presentation by NextDecade that told investors the company could boost production by 1 mtpa on each of the proposed six liquefaction trains at Rio Grande LNG through "debottlenecking." The potential capacity increase is not part of the application that is pending a FERC decision.

The developer told FERC on June 3 that it was just highlighting the upside potential of the company's liquefaction equipment, an opportunity the developer said it realized in the years since it began the application process.

The Rio Grande LNG project in Brownsville, Texas, cleared a final environmental impact statement issued by FERC staff in April. NextDecade and some analysts who cover the company have said they expect a FERC order approving the project in July. (FERC dockets CP16-454, CP16-455)

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"NextDecade clearly misrepresented their plans for this facility, and how much fracked gas they plan to ship through Texas communities to export," Sierra Club attorney Nathan Matthews said in a statement. "It is critical that FERC commissioners take this issue seriously and reassess the true impact this polluting facility would have on communities and the climate."

NextDecade said it recognizes that "proper authorization is always required to modify LNG project capacity" and that "if the market in the future" showed interest in additional capacity, the developer would seek the necessary approvals.

That is not unusual. LNG export pioneer Cheniere Energy Inc. asked for an increase to authorized production capacity at Sabine Pass as the company developed the terminal in Louisiana. FERC granted the request in 2014. In Texas, Freeport LNG Development LP requested authorization to increase the production capacity at its terminal, an authorization FERC gave in 2016. NextDecade noted both examples in its response to FERC.

More recently, Australia's LNG Ltd. sought FERC approval for a 0.8-mtpa increase in production capacity from its proposed Magnolia LNG terminal in Louisiana. The increase would be achieved through an optimized design. Commission approval is pending, but FERC staff cleared the proposed expansion in a December 2018 environmental assessment that noted that the amended capacity would not require any additional construction or new facilities beyond what FERC already approved. (FERC docket CP19-19)

The DOE authorized the expanded export capacity at Magnolia LNG in March, bringing the facility's total approved capacity to 8.8 mtpa.

The Cheniere and Freeport expansions were also greenlit after clearing environmental assessments, reviews that are less extensive than the environmental impact statements the Sierra Club has pushed.