LNG

NextDecade Corp., the developer of the Rio Grande LNG export project in Texas, has formally taken a final investment decision to build the first three liquefaction Trains and export facilities with anticipated full capacity of around 27 million tonnes per annum with funding from the US, the Middle East and Asia.

NextDecade Corp., the developer of the Rio Grande LNG export project in Texas, has teamed up with a New York investment fund and TotalEnergies to enable a final investment decision for the first three liquefaction Trains and with the French major buying 5.4 million tonnes per annum of cargoes and taking a large stake in NextDecade.

French bank Société Générale has confirmed it was no longer an advisor to US energy company NextDecade Corp’s Rio Grande liquefied natural gas export project in Texas, which is nearing a final investment decision and has signed up a top list of global buyers from the US to China.

As the project's mandated financial advisor, Société Générale had been the lead bank in preparing financing for the LNG plant before exiting the role.

NextDecade had appointed Société Générale in May 2017 along with Australia’s Macquarie Capital to act as joint financial advisors for the debt and equity financing of the Rio Grande project at the port of Brownsville.

Société Générale and Macquarie have each played extensive roles in advising and participating in debt and equity financing for large-scale infrastructure and LNG projects in the US and elsewhere.

Engaged since 2017

France’s SocGen had been an advisor since just before the US Rio Grande LNG project listed on the US-based Nasdaq global stock exchange in July 2017 as NextDecade.

NextDecade was then run by former Shell senior executive, the late Kathleen Eisbrenner, who had organised the listing and taken the company forward.

Without commenting on the reason for this specific exit, SocGen said that energy sector commitments were set to end all reserve-based lending to US onshore projects by the end of 2023 and to only participate in financing LNG projects aligned with the bank's engagement in policies promoting a strict Net Zero doctrine.

“At Société Générale, we believe that banks have a key role to play in the positive transformations of the world and the sustainable development of economies. In line with our corporate purpose, we have placed sustainable development - and the energy transition in particular - at the heart of our strategy,” the bank states grandly, while noting it was a founder member in 2021 of the “Net-Zero Banking Alliance”.

The Paris-based bank has pledged to commit itself to aligning its portfolios to trajectories aimed at global carbon neutrality.

The bank has said recently it was reinforcing its objective to radically reduce exposure to the oil and gas production sector by 2025.

Confirmation

NextDecade said on March 28 that Australia's Macquarie is still a financial advisor of the company along with Japan’s largest bank, Mitsubishi UFJ Financial Group, and confirmed that Société Générale ended a five-year relationship with the Houston-based company in 2022.

NextDecade earlier in March 2023 amended its engineering contract agreement with US company Bechtel Energy to extend the price validity of the engineering, procurement and construction contract for the building of the first three liquefaction Trains to June 15, 2023.

NextDecade currently estimates the aggregate lump-sum EPC cost to construct Trains 1-3 of the Rio Grande Facility at approximately $11.5 billion

The final EPC lump-sum contract pricing for Trains 1-3 of the Rio Grande facility will be determined prior to an FID being announced.

NextDecade said that it was currently targeting a positive FID on Trains 1-3 of the Rio Grande project before the end of the second quarter of 2023, with FIDs on the remaining Trains to follow later.

Environmental permits

Next Decade has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.

NextDecade signed about half a dozen sales and purchase agreements (SPAs) in 2022, the most recent being a volume increase in December with ENN LNG of Singapore, a trading unit of the Chinese ENN Natural Gas Group.

Under the 20-year SPA, ENN will now purchase 2.0 MTPA of LNG. NextDecade said this was a 500,000 tonnes per annum increase from the original 1.5 MTPA SPA announced earlier in 2022.

NextDecade earlier in December 2022 signed an SPA with Galp Trading S.A. of Portugal.

This was its fifth deal of the year and the increase of volumes for ENN Group was its sixth volume sign-up.

NextDecade has made progress with other SPAs during 2022, including one with ExxonMobil Corp.

The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.

NextDecade has also signed three supply agreement with Chinese companies, including a 20-year deal with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings, the ENN Group and with Guangdong Energy Group Natural Gas.

NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has amended its engineering contract agreement with US company Bechtel Energy to extend the price validity.

The engineering, procurement and construction contract with Bechtel for the building of the first three liquefaction Trains has been extended to June 15, 2023.

“NextDecade currently estimates the aggregate lump-sum EPC cost to construct Trains 1-3 of the Rio Grande Facility at approximately $11.5 billion,” said NextDecade in a statement to the Nasdaq global exchange.

“The final EPC lump-sum contract pricing for Trains 1-3 of the Rio Grande facility will be determined prior to a final investment decision and is subject to change, including if RGLNG does not issue a full notice to proceed to Bechtel on or before June 15, unless extended by mutual agreement of the parties thereto,” the company explained.

NextDecade said that it was currently targeting a positive FID on Trains 1-3 of the Rio Grande project before the end of the second quarter of 2023, with FIDs on the remaining Trains to follow later.

Houston, Texas-based Next Decade has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.

Numerous delays

The Rio Grande project has been delayed on numerous occasions over the years and was originally expected to start producing LNG in 2023.

NextDecade signed about half a dozen sales and purchase agreements (SPAs) in 2022, the most recent being a volume increase in December with ENN LNG of Singapore, a trading unit of the Chinese ENN Natural Gas Group.

Under the 20-year SPA, ENN will now purchase 2.0 MTPA of LNG. NextDecade said this was a 500,000 tonnes per annum increase from the original 1.5 MTPA SPA announced earlier in 2022.

All volumes of LNG are indexed to the US benchmark Henry Hub natural gas price and will be supplied from the first three Trains at the Rio Grande facility.

Portugal deal

NextDecade earlier in December 2022 signed an SPA with Galp Trading S.A. of Portugal.

This was its fifth deal of the year and the increase of volumes for ENN Group was its sixth volume sign-up.

NextDecade has made progress with other SPAs during 2022, including one with ExxonMobil Corp.

The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.

NextDecade has also signed three supply agreement with Chinese companies, including a 20-year deal with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings, the ENN Group and with Guangdong Energy Group Natural Gas.

NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a 20-year sale and purchase agreement with ExxonMobil LNG Asia Pacific.

Under the SPA, the US major’s Asia unit will purchase 1 million metric tonnes per annum of LNG supplied from the first two Trains of the Rio Grande facility. The first Train expected to start commercial operations as early as 2026.

NextDecade mostly recently also signed a third supply agreement with a Chinese company since the start of 2022.

The Houston, Texas-based company signed a 20-year SPA with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings. This deal was also for 1 MTPA of LNG indexed to Henry Hub and delivered on a free-on-board (FOB) basis.

NextDecade in April 2022 signed a 20-year SPA with the Singapore trading arm of ENN Group of China and another with China’s Guangdong Energy Group Natural Gas.

“The signing of this long-term SPA with ExxonMobil, a global leader in the energy industry, represents another significant milestone for RGLNG and signifies the beginning of a mutually beneficial relationship,” said Matt Schatzman, NextDecade’s Chairman and Chief Executive.

Strategy

“This agreement highlights the success of NextDecade’s strategy to provide customers with low carbon-intensive LNG to help them meet their carbon reduction goals, while providing them access to secure energy supply,” added Schatzman.

The US company has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.

“LNG will play an increasingly important role in helping society reduce emissions during the energy transition,” said Peter Clarke, Senior Vice President of LNG for the ExxonMobil Upstream Company.

“We look forward to working with NextDecade to continue growing ExxonMobil’s LNG portfolio and delivering the lower-emissions energy the world needs,” added Clarke.

NextDecade has said that based on current expected demand for LNG and assuming the achievement of further LNG contracting and financing, the company anticipated making a positive final investment decision on up to three Trains in the second half of 2022, with FIDs of its remaining Trains to follow thereafter.

NextDecade, the developer of the currently dormant Rio Grande LNG export project along the Brownsville Ship Channel, has posted third-quarter earnings after a year of little activity prior to the global increase in prices and demand.

Chart Industries, the US LNG equipment-maker, said orders in the third quarter rose 7.4 percent from the previous three months as LNG fuel infrastructure demand filled a gap left by a pause in orders from large LNG ventures on the Gulf Coast.

Third-quarter net income rose to $21.7 million compared with $18.80M in the same quarter of 2019.

Orders amounted to $262.7M in the three months, particularly in the Distribution and Storage division for hydrogen equipment, water treatment, LNG regas, ISO containers and repair, service and leasing.

The orders were lower than the $338M achieved in the same three months of 2019, though took the backlog to $684.9M, with record levels seen in both the Distribution & Storage Eastern Hemisphere and Distribution & Storage Western Hemisphere units.

“Orders continued to be very strong for LNG infrastructure related equipment, including the highest trailer order quarter since the third quarter of 2018, continued record levels for fueling stations and record order levels for ISO containers,” said Chart.

Chart added that it continued to see strengthening demand across the business with the exception of its Energy & Chemicals FinFans (E&C FinFans) segment where third- quarter orders were down $28.9M when compared to the third quarter of 2019.

Chart's orders of $262.7M were down slightly from the third quarter of 2019, which included a $6.6M air cooled heat exchanger order for Calcasieu Pass LNG.

D&S West and D&S East orders increased 38 percent and 13.9 percent respectively over the third quarter of 2019.

“The strength of our order activity in the third quarter 2020 included multiple records and a very strong start to October orders, even without all industrial gas customers fully back in the field due to continued Covid-19 restrictions,” stated Jill Evanko, Chart’s Chief Executive and President.

Evanko noted that the company took recent steps to expand its hydrogen product offering and expanded long-term agreements would set the stage for strong 2021 results.

Booked orders were with 147 new customers in the third quarter and in the year-to-date numbered 407.

Chart noted in its highlights that it signed 10 new long-term agreements with major customers, including for repair and service, hydrogen and LNG fueling stations.

The third-quarter 2020 HLNG vehicle tank orders were over $20 million, the second highest quarterly level.

“This has been driven by high demand from our customers on long-term agreements, demand for LNG over-the-road vehicles in geographies outside of Europe, including South America, Russia and Japan, and expanded applications for these tanks such as for LNG buses,” said Chart.

“LNG infrastructure and small-scale applications are continuing to expand, and we expect that to continue over the next several years,” the company explained.

“And while big LNG projects remain on the horizon, final Investment decisions have been delayed. Yet even with those delays, in the third quarter 2020, we received an early engineering release for a big LNG terminal for brazed aluminum heat exchangers and cold boxes to be used on the natural gas pre-treatment Train,” said Chart.

After the third quarter, Chart reported the October 2020 divestiture of the cryobiological business for $320M in cash.

Proceeds were used to pay down debt, close the $10M acquisition of US Worthington Industries cryogenic trailer and hydrogen trailer business in Theodore, Alabama, and to invest in French firm McPhy to expand commercial hydrogen opportunities.

Chart reiterated its full-year 2020 guidance of revenue of $1.18 billion and associated diluted adjusted earnings per share of $2.25.

The Atlanta, Georgia-based company said its full-year 2021 outlook was for revenue of between $1.25Bln and $1.32Bln and associated diluted adjusted EPS of between $3.00 and $3.40.

“As we have said on numerous occasions, we consider ourselves the provider of cryogenic equipment regardless of molecule and we believe that there will be a hybrid of renewable energy sources as the clean energy transition continues,” said Chart.

“Hydrogen will be significant in this transition, and with our 50-plus years of hydrogen equipment experience, we will play a key part in the full hydrogen value chain,” the company added.

The US Army Corps of Engineers awarded construction contract to Callan Marine Ltd. to complete the second phase of the four-phase Corpus Christi Ship Channel Improvement Project to improve safety and efficiency for US crude oil and LNG shipments in the area.