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NextDecade ready to advance with as few as 2 trains at Texas LNG plant

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NextDecade ready to advance with as few as 2 trains at Texas LNG plant

As a global LNG supply glut stalls final investment decisions for export terminal projects, the developer of one Texas project said it can move forward with as little as a third of its overall proposed capacity.

In a Nov. 27 news release, Rio Grande LNG developer NextDecade Corp. said it could sanction as few as two liquefaction trains, representing a total of 9 million tonnes per annum of LNG production capacity. The project as currently proposed could eventually house up to six trains capable of producing a total of 27 mtpa, which would make it one of the biggest LNG export projects in the U.S.

"We are still planning to build our entire 6-train LNG project at Rio Grande," NextDecade spokesman James Markham-Hill said in an email. "We are merely pointing out the competitiveness of our Rio Grande LNG project, which allows us to economically develop our project in phases should global market dynamics support that approach."

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As proposed, the full Rio Grande LNG export terminal would be among the largest in the U.S.

Source: NextDecade

Moving forward with less than the full design capacity of an LNG export proposal is not new. Cheniere Energy Inc. is building two trains at its Corpus Christi terminal as a third awaits a final investment decision. Four trains at Cheniere's Sabine Pass facility are already in service, with a fifth under construction and a sixth that is fully permitted but lacking the final go-ahead from the developer.

Among those still awaiting federal authorization, Tellurian Inc.'s Driftwood LNG export facility could also opt for a smaller capacity than its proposed 27.6 mtpa design, investment bank Tudor Pickering Holt & Co. said in a recent note. The project would be developed in phases, giving the company the flexibility to opt out of the full size of the proposal after building the first 11 mtpa of capacity. Cheniere in October replaced a proposal for a two-train expansion at Corpus Christi with a proposal for seven smaller trains from a midscale project. Executives said the new model would allow the company to ramp up small, incremental volumes as it brings modular trains online.

In the same news release, NextDecade said it estimates engineering, procurement and construction costs for the entire six-train proposal are between $478 a tonne and $502 a tonne, and it is looking at ways to get costs down to $450 a tonne. A two-train project would cost between $535 a tonne and $563 a tonne, according to Markham-Hill, with a target of $505 a tonne. The company is in the process of finalizing an engineering, procurement and construction contract with Chicago Bridge & Iron Co. NV, according to the release.

The Rio Grande project is one of three LNG export terminals being proposed for Brownsville, Texas, at the southern tip of the state. NextDecade said it expects a schedule for the Federal Energy Regulatory Commission's environmental review of the project "in the near future," with a final order in the second half of 2018. (FERC dockets CP16-454, CP16-455)