NextDecade Corp. has delayed final investment decision (FID) for its 27-million tonne/year (tpy) Rio Grande LNG (RGLNG) plant to 2021 due to the COVID-19 pandemic’s effects on the LNG market. The company has adjusted spending to ensure sufficient pre-FID liquidity to operate through year-end 2021.
RGLNG has a 2-million tpy, 20-year sale and purchase agreement with Shell and believes it can achieve FID with an additional 9 million tpy of long-term contracts. On Mar. 6, 2020, the US Federal Energy Regulatory Commission authorized RGLNG to begin full site preparation. NextDecade has targeted a 2023 in-service date for Rio Grande.
In first-quarter 2020, NextDecade entered into an agreement to sell 100% of the equity interests in Rio Bravo Pipeline Co. LLC to a wholly owned subsidiary of Enbridge for a purchase price not to exceed $25 million (OGJ Online, Feb. 14, 2020). The transaction closed on Mar. 2, 2020. At closing, NextDecade received a $15-million cash payment from Enbridge, and Enbridge assumed all responsibility for development, financing, and operations of Rio Bravo pipeline.
Pursuant to lump-sum turnkey engineering, procurement, and construction (EPC) contracts executed with Bechtel in May 2019, the EPC contracts’ prices were valid until April 22, 2020, subject to certain agreed-upon adjustments set forth in the contracts. On Apr. 22, 2020, Bechtel agreed to extend the price validity of the EPC contracts to July 31, 2020.
NextDecade and Bechtel continue to progress engineering and procurement for RGLNG. Bechtel completed initial engineering and procurement work (LNTP-1) end- 2019 and, at the direction of NextDecade, began additional engineering and procurement work (LNTP-2) on Jan. 1, 2020. Bechtel completed LNTP-2 work in April 2020 and engineering is now 16% complete. During LNTP-1 and LNTP-2, NextDecade and Bechtel completed all pre-FID engineering and procurement work for RGLNG, enabling placement of major equipment orders and award of subcontracts immediately following FID. NextDecade and Bechtel have agreed to a limited scope of ongoing work (LNTP-3) which will provide for continued engineering progress for RGLNG.
On Apr. 30, 2020, RGLNG and the Brownsville Navigation District of Cameron County, Tex., amended their lease agreement. The lease amendment extends the effective date for commencing the lease to May 6, 2021, and further provides that RGLNG has the right to extend the effective date to May 6, 2022. The lease amendment provides RGLNG with continued control of the 984-acre site for the full-scale development of its LNG plant in the Port of Brownsville, Tex.
