US Natural Gas Gets A Boost With FERC Ruling On Rio Grande LNG

By a 3-1 margin, the Federal Energy Regulatory Commission (FERC) voted on April 21 to reaffirm approvals initially issued in 2019 that will allow NextDecade’s big new liquefied natural gas (LNG) export facility to move forward. The vote to reaffirm the decision was made necessary by an order issued 18 months ago by the District of Columbia US Court of Appeals.

In an interview on Monday, NextDecade Chairman and CEO Matt Schatzman confirmed the FERC decision now clears the way to move quickly to a final investment decision (FID) on the project. “We have publicly disclosed that we expect to make it (FID) by the end of Q2,” he says.

Schatzman went onto say that the company’s plan remains to confirm the FID for the first three trains in what would ultimately become a five-train plant. The initial three trains would be capable of processing 17.6 million tons/year of LNG.

“We have five fully permitted and approved trains now, and we plan to launch with three trains,” he says, adding, “I’d have to go back and look at history, but I don’t know if anyone’s ever done that before.” [A quick look back through the brief history of the US LNG industry shows that Cheniere Energy kicked off initial construction of its Sabine Pass facility – currently the largest in the country – with two trains. That number has since been expanded to six trains, with plans in place for future expansion. The author could find no example of any other US facility that kicked off a project with as many as three trains.]

The FERC decision was made against the wishes of a small group of non-local protesters who staged a demonstration outside the building, but Schatzman was quick to point out the strong support the facility enjoys from local leaders and the local community. “This is an exciting project and we value the open dialogue with relevant stakeholders and we’re proud of our partnerships across the region,” he says. “We’ve got a tremendous amount of bi-partisan local support, and the lion’s share of people who came to our open house a couple of weeks ago were super excited. We are supported by Cameron County Judge Eddie Trevino, the county commissioners, federal and state legislators and local business owners.”

In addition to plans for a carbon capture project and a broad variety of environmental mitigations to which NextDecade has committed, a significant part of the community’s excitement no doubt relates to the fact that the project will create an estimated 5,000 jobs during the initial and subsequent construction phases, which Schatzman says will last for a decade. “We’re going to have a tremendous impact on the community, a positive impact from the standpoint of creating thousands of jobs,” he says, noting that the company has a commitment to filling at least 35% of the jobs from the local workforce. “In the past, these workers have traveled outside the Rio Grande Valley, to Corpus Christi or the Golden Triangle, to do this kind of work. They’re used to working hours away from home. Now, they’ll be able to work right here at home.”

Another big advantage for this project is its proximity to the Eagle Ford Shale and Permian Basin, and the immense store of natural gas that lies within them. “The location of our site is advantaged when it comes to gas supply. We will source natural gas from the Eagle Ford and the Permian Basin, collectively probably 700 trillion cubic feet of gas available,” he says.

When asked what other steps remain in terms of obtaining permits from either state or federal agencies, Schatzman’s reply was simple: “We are good to go.” If all goes according to plan and the company’s current timeline, the first train of the facility could be up and running in a little over four years after construction begins.

For anyone who thinks this has all gone quickly and efficiently, Schatzman would no doubt be happy to remind them that getting to this point in the process has taken 8 years of hard work. What FERC’s decision last Friday did was to place a little light at the end of a long, arduous regulatory tunnel.