Content Detail

• Content META

  Title	US player keeps its eyes on expansion plans as clean energy underinvestment makes room for more LNG
  ID	7469885
  External ID	7599592708
  Author	Melisa Cavcic
  Published Date	March 4, 2025, 12:09 p.m.
  Summary	Customize Consent Preferences March 4, 2025, by Melisa Cavcic Given the worldwide spike in total demand for natural gas, Houston-headquartered energy player NextDecade Corporation is contemplating f
  Tags	None
  URL	https://www.offshore-energy.biz/us-player-keeps-its-eyes-on-expansion-plans-as-clean-energy-underinvestment-makes-room-for-more-lng/
  Sentiment	Negative: 0.01121    Neutral: 0.06482    Positive: 0.92397
  Relevance	0.01245

• Content Details

  Content ID	4775131
  Key	e58a2606-e9e5-49f5-86c3-dec8d9d0f364
  Content	Customize Consent Preferences March 4, 2025, by Melisa Cavcic Given the worldwide spike in total demand for natural gas, Houston-headquartered energy player NextDecade Corporation is contemplating further capacity expansion of its liquefied natural gas (LNG) export terminal at the Port of Brownsville, Texas. This expansion quest is in line with the firm's expectations of further growth in LNG demand over the coming years, driven by the slowdown in clean energy spending because of global price volatility and political upheavals in certain regions. Rio Grande LNG terminal; Courtesy of NextDecade With the growing global demand for natural gas expected to continue rising, the U.S. player underlines that gas is also anticipated to have a meaningful role in long-term global energy markets as a secure, reliable, and affordable fuel source, as well as to support renewables growth. Annual global gas demand saw a 700 billion cubic meters (bcm) surge over the past decade at a 1.8% compound annual growth rate (CAGR) and the global gas demand increased around 2.5% in 2024 despite limited new LNG supplies. While noting that substantial additional investments in LNG infrastructure and significant incremental LNG are needed to facilitate gas demand growth up to 2040, NextDecade uses Wood Mackenzie's LNG supply data to point out that LNG is poised to become an increasing portion of the global natural gas supply because of constraints in indigenous gas production and transportation. The global gas demand is forecast to outpace LNG supply growth. Taking into account Wood Mackenzie LNG supply data as of February 15, 2025, and its 2025-2040 forecast for global gas demand, NextDecade highlights that the existing regas capacity can accommodate substantial LNG supply growth, with operational regas capacity expected to accommodate more than 1,300 mtpa of LNG by 2030, supporting significant additional LNG supply capacity. Source: NextDecade Even though 44 countries around the globe currently have operational regas infrastructure and eight new countries have it under construction, regas infrastructure is not expected to become a bottleneck as LNG is anticipated to grow as a proportion of the total global natural gas supply. NextDecade emphasizes that underinvestment in clean energy could create additional LNG demand on the global energy scene. The International Energy Agency (IEA) has outlined many possible decarbonization pathways to meet energy transition goals and even in the most conservative IEA option related to the stated policies scenario (STEPS), around $800 billion additional annual investment in clean energy is needed by 2035. This translates to approximately $2 trillion incremental annual investment being required for the announced pledges scenario (APS) and about $3 trillion needed for the net zero emissions (NZE) scenario. With this in mind, NextDecade expects clean energy to be underfunded due to increasing costs and the magnitude of required investment while natural gas production and LNG can be increased quickly and economically to fill gaps in the global energy supply. Therefore, the company is adamant that natural gas production, particularly in the U.S., can be scaled more quickly and economically than many global clean energy sources, enhancing the role of U.S. LNG in filling gaps in global energy supply. How does Rio Grande LNG fit into this? NextDecade is convinced that U.S. LNG, including incremental LNG from expansion trains at the Rio Grande LNG facility, is “an attractive and economic option” for global energy users. The firm seeks to deliver “secure, economically attractive, and sustainable energy solutions through the safe and efficient development and operation” of liquefaction and carbon capture and storage (CCS) infrastructure. The company claims to be committed to supporting the Rio Grande Valley community by creating thousands of jobs, investing millions into the local supply chain, supporting education systems, and regularly engaging with residents and local stakeholders. “NEXT Carbon Solutions is in the early stages of developing a potential CCS project at the Rio Grande LNG Facility, focused on post-combustion carbon capture,” outlined NextDecade while disclosing that it is advancing commercial discussions with multiple potential LNG counterparties for long-term offtake from trains 4 and 5, as LNG trains 1 and 2 are 38.1% complete and Train 3 is 15.3% finished. Rio Grande LNG Phase 1 site plan; Source: NextDecade The U.S. player has also announced expansion capacity development plans for the Rio Grande LNG facility, including developing and beginning the permitting process for trains 6-8, with a total potential liquefaction capacity of around 18 mtpa, bringing total Rio Grande LNG terminal's potential liquefaction capacity to approximately 48 mtpa. The firm recently entered into a credit agreement for a six-year, $175 million senior secured loan to repay existing revolving credit facility and interest term loan and to fund working capital and general corporate purposes, including development expenses for expansion trains at the Rio Grande LNG facility. NextDecade's natural gas liquefaction and export facility near Brownsville, with approximately 48 mtpa of potential liquefaction capacity is currently under construction or in development, with Phase 1 encompassing trains 1-3 under construction, trains 4-5 currently being commercialized, and trains 6-8 in development and beginning the permitting process. The first LNG is expected in 2027. However, the U.S. firm explains that there is sufficient space at the site for the development of up to ten total liquefaction trains, with the site location benefitting from the advantage gained through the proximity to abundant natural gas resources in the Permian Basin and Eagle Ford shale, access to an uncongested waterway, and fewer and less severe weather events than other U.S. Gulf Coast areas. Rio Grande LNG terminal; Courtesy of NextDecade “NEXT carbon solutions potential CCS project at the Rio Grande facility in early stages of development, exploring subsurface and technical options and potential avenues for commercialization. Successful project development may lead to future CCS project opportunities at third-party facilities,” elaborated the American firm. The U.S Court of Appeals for the D.C. Circuit issued an order in August 2024, vacating the reauthorization of the Rio Grande LNG facility on the grounds that the Federal Energy Regulatory Commission (FERC) should have issued a supplemental environmental impact statement (EIS) during its reauthorization process. On October 21, 2024, the Houston-based player filed a petition for rehearing and rehearing en banc with the court. This content is available after accepting the cookies. Change cookie-settings View on Offshore-energy. The petitioners in the case and FERC filed responses on December 9, 2024, to the company's petition, and the court's decision regarding rehearing is still pending. Prior to this, FERC issued a notice of its intent to prepare a supplemental EIS on September 13, 2024, in response to the court's decision, setting forth a schedule providing for the issuance of a draft of the supplemental EIS in March 2025, the final supplemental EIS by the end of the July 2025, and issuance of a final order by November 20, 2025. The firm made another filing in November 2024 with the court referencing the decision in Marin Audobon Society v. FAA, which held that Council on Environmental Quality (CEQ) regulations implementing environmental justice analyses related to the requirements of Executive Order 12898 are unenforceable. NextDecade notes that the court's decision in its case relied primarily on CEQ environmental justice regulations, citing Executive Order 12898. This content is available after accepting the cookies. Change cookie-settings View on Offshore-energy. Come January 23, 2025, the company submitted another filing with the court referencing executive orders issued by President Donald Trump , who revoked Executive Order 12898. With the revocation, the firm believes that all claimed errors cited by the court as the basis for its decision are based on authorities that are now without force. FERC followed suit on February 6, 2025, and filed a letter with the court stating that “regulatory processes ‘adhere to only the relevant legislated requirements for environmental considerations'{…} and the Executive Order giving rise to those (CEQ) regulations has been revoked.” The court's decision will not be effective until it has issued its mandate, which is not expected to occur before the appeals process has been completed. In the meantime, construction continues on Phase 1 at the Rio Grande LNG facility and the U.S. firm expects to continue to take all available legal and regulatory actions, including but not limited to appellate actions, to ensure that construction on Phase 1 will continue and that necessary regulatory approvals will be maintained to enable a future positive final investment decision (FID) on trains 4 and 5. This content is available after accepting the cookies. Change cookie-settings View on Offshore-energy. Furthermore, NextDecade is adamant that the Rio Grande LNG facility is advantaged and de-risked by Bechtel 's track record of LNG project execution, with equity partners aligned on the initial five-train development and confident in the terminal's competitive positioning. These equity partners have options to provide 60% of equity financing for each of Train 4 and 5. While an engineering, procurement, and construction (EPC) contract was signed with Bechtel for Train 4, the firm expects to refresh pricing in 2025 and confirms strong commercial progress for this train, including 20-year LNG sale and purchase agreement (SPA) with ADNOC for 1.9 mtpa, heads of agreement for 20-year SPA with Aramco for 1.2 mtpa, and TotalEnergies ' LNG purchase option for 1.5 mtpa that NextDecade expects to be exercised. In addition, Train 5 commercialization is also underway. The American player has provided a construction update for its Rio Grande LNG facility Phase 1, which underlines a continued steel assembly in Train 1 area and adjacent pipe racks, progress on Train 2 foundations and commenced steel assembly, tank 1 roof panels being set in place, first wall concrete poured for Tank 2, and continued installation of underground structures, loading berths, piling, concrete foundations, and other site works. The Rio Grande LNG facility has the potential to be one of the world's largest LNG production and export facilities in the U.S. player's view, as developing on a single, contiguous site is seen as having significant advantages, with all trains expected to use the same established technologies and proven design while geotechnical conditions are understood and perceived to be more advantageous for infrastructure development than other areas on U.S. Gulf Coast. Other points in favor of expanding the LNG terminal's capacity pinpoint that construction conditions are established, and labor and equipment can easily shift across the site as additional trains are developed and constructed, as extensive waterfront on-site facilitates additional berth space and vessel capacity, supporting infrastructure for efficient LNG production, including storage tanks and transportation infrastructure. This content is available after accepting the cookies. Change cookie-settings View on Offshore-energy. With this at the forefront, NextDecade underscores that the development of Train 5 is aided by the commercial momentum and partner options, as Phase 1 equity partners hold options to fund a cumulative 60% of the equity funding for Train 5. TotalEnergies has an LNG purchase option for 1.5 mtpa from Train 5 for a 20-year SPA. The Houston-based firm is also engaged in ongoing commercial discussions with multiple counterparties interested in LNG offtake from Train 5 for which an EPC contract with Bechtel is expected to be finalized in 2025. Regarding the beginning of the development and permitting process for trains 6-8, NextDecade says that Train 6 with around 6 mtpa is being developed inside the existing levee adjacent to trains 1-5. The company expects Train 6 pre-filing with FERC in 2025 and full application filing in early 2026. On the other hand, trains 7-8 with approximately 12 mtpa are being developed on site outside of the existing levee and further details on the permitting process are anticipated to come later this year. Overview of Phase 1 LNG sale and purchase agreements (SPAs); Source: NextDecade Located on a 984-acre site near Brownsville, Rio Grande LNG is seen as the first U.S. LNG project offering an expected emissions reduction of more than 90% through its proposed carbon capture and storage undertaking, which is anticipated to capture and permanently store more than 5 million metric tons per annum of CO2. The company claims to be executing “a substantial and diversified feed gas sourcing strategy” to spread risk exposure across multiple contracts, suppliers, and pricing hubs, with plans to establish risk management capabilities in-house to mitigate gas supply disruptions and weather-induced volatility in basis pricing and secure reliable, low-cost feed gas supply. This content is available after accepting the cookies. Change cookie-settings View on Offshore-energy. Agreements have been put in place for gas transportation on both a firm and interruptible basis to support commissioning and operations and provide the ability to purchase gas at Agua Dulce, gaining access to prolific resources from the Permian Basin and Eagle Ford Shale and providing significant flexibility to obtain competitively priced feed gas. With over 90% of Phase 1 nameplate capacity contracted with a diverse mix of customers and Henry Hub-linked SPAs providing around $1.8 billion in expected annual fixed fees, the total estimated capital project costs are calculated at $18 billion while $18.4 billion in project financing is closed concurrently with FID, providing full funding for the construction of this stage. Source: NextDecade This entails $6.1 billion total equity commitments primarily via a joint venture with high-quality partners, $12.3 billion project debt financing, including $11.1 billion construction term loan facilities, $500 million working capital facility, and $700 million senior secured private placement notes. As over $1.85 billion of the term loan facilities has been refinanced into senior secured notes and loans since FID, NextDecade expects economic interest of up to 20.8% in Phase 1. Moreover, the Rio Grande LNG facility Phase 1's equity joint venture partners encompass NextDecade as the project sponsor with around $283 million commitment up to 20.8% economic interest; financial investors with about $4.8 billion commitment of minimum 62.5% economic interest covering Global Infrastructure Partners (GIP) with$3.5 billion commitment, Singapore's GIC with $750 million commitment, and the UAE's Mubadala with $500 million commitment; alongside TotalEnergies as a strategic investor with approximately $1.1 billion commitment of 16.7% economic interest. As NextDecade is developing a potential end-to-end CCS project at the Rio Grande LNG facility, it is currently exploring subsurface options for storage of expected volumes of CO2 to be captured, technology options, and avenues of commercialization for the potential CCS project at the Rio Grande LNG terminal. The U.S. player underlines that successful development of the potential CCS project at the Rio Grande LNG facility may lead to project opportunities at third-party industrial facilities in the future, with the potential to make meaningful impacts toward a lower carbon future through the capture and storage of greenhouse gas (GHG) emissions at this LNG terminal in Texas. The U.S. under the watchful eye of President Trump's administration is determined to push LNG projects forward, as confirmed by the go-ahead given to Kimmeridge for its proposed 9.5 mtpa LNG export terminal on the west bank of the Calcasieu Ship Channel near Cameron Parish, Louisiana. This content is available after accepting the cookies. Change cookie-settings View on Offshore-energy. Share this article
  Content Reference URL	None

• Publisher

  Publisher Name	Offshore-Energy.biz (#1166)
  Publisher URL	https://offshore-energy.biz
  Description	None
  Trust Flow Score	25
  Citation Flow Score	56

• Data Source

  Data Source Name	Quantexa News (#5)
  Data Source Type	news
  Data Source URL	https://app.aylien.com/dashboard
  Description	Welcome to Quantexa News API — the most powerful way to aggregate, filter, and integrate global news data into your apps and models.
  Weight	10