U.S. Appeals Court Vacates FERC Authorization for Rio Grande LNG

A U.S. appeals court has vacated the remand authorization of NextDecade Corporation’s Rio Grande LNG export project issued by the Federal Energy Regulatory Commission on the ground that the FERC should have issued a supplemental Environmental Impact Statement (EIS) during its remand process.

NextDecade (NASDAQ: NEXT), whose Rio Grande LNG project is already under construction in Texas, saw its shares plummet on the NASDAQ after the court’s decision and closed down 17.87% on Tuesday.

The company said in a statement that it “is disappointed in the Court’s decision and disagrees with its conclusions.”

NextDecade is now reviewing the Court’s decision and assessing all of its options.

Currently, construction continues on the first three liquefaction trains and related infrastructure (Phase 1) at the Rio Grande LNG Facility, and the company is evaluating the impact of the Court’s decision on the timing of a positive final investment decision (FID) on Train 4.

Just a day earlier, NextDecade Corporation awarded a $4.3-billion engineering, procurement and construction (EPC) contract to Bechtel Energy Inc. for the fourth train of the Rio Grande LNG project.

As of Monday this week, NextDecade expected total estimated project costs at between $6.0 billion and $6.2 billion for Train 4 and related infrastructure, in line with the per-train cost of the three-train Phase 1 at the Rio Grande LNG Facility, which is currently under construction.

Before the court’s decision, NextDecade was targeting a positive Final Investment Decision of Train 4 in the second half of 2024, subject to gaining appropriate commercial support and obtaining adequate financing to construct Train 4 and related infrastructure.

In May, ADNOC bought an 11.7% stake in Phase 1 of Rio Grande LNG, in the first strategic investment of Abu Dhabi’s national oil company in the U.S. The state energy firm of the United Arab Emirates (UAE) also signed a 20-year LNG offtake agreement from Rio Grande LNG Train 4.

In June, Saudi Aramco said it expects to buy liquefied natural gas from Train 4 at Rio Grande LNG under a 20-year agreement. Aramco and NextDecade are currently in the process of negotiating a binding agreement, the effectiveness of which will be subject to a positive Final Investment Decision on Train 4.

By Tsvetana Paraskova for Oilprice.com

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