NextDecade Corp. has landed a second customer for its proposed Rio Grande liquefied natural gas (LNG) project in South Texas, announcing a long-term deal with a major Chinese utility as it heads closer to a possible final investment decision (FID) later in the year.
The Houston-based company disclosed Thursday it has entered a heads of agreement with Guangdong Energy Group Natural Gas Co., Ltd. for 1.5 million metric tons/year (mmty) of LNG indexed to the Henry Hub.
Both companies are expected to complete a sale and purchase agreement (SPA) in 2Q for gas to be supplied from the Brownsville terminal’s first train. According to NextDecade’s current timeline, the first train at Rio Grande would be operational in 2026.
Guangdong Energy Chairman Zhu Zhanfang said the agreement for Henry Hub-linked LNG would become an important part of the company’s “transit to a greener future,” but the company isn’t just interested in low-carbon supplies of U.S. gas.
NextDecade is also working to develop carbon capture and sequestration systems (CCS) at Rio Grande. Late last year, it requested a limited amendment to modify FERC’s 2019 authorization so it can incorporate CCS technology into the approved site.
“We look forward to a long lasting and fruitful cooperation with NextDecade, not necessarily just in LNG supply, but potentially in carbon capture and storage as well,” Zhu said
NextDecade has signed one other customer to take LNG from the proposed 27 mmty, five-train terminal. Shell plc agreed to purchase 2 mmty in 2019 for a term of 20 years at prices linked to Brent crude and Henry Hub.
French company Engie SA ended negotiations in 2020 to purchase LNG from Rio Grande over the French government’s concerns about emissions related to hydraulic fracturing.
In 2021, shortly after NextDecade ended plans for an LNG terminal in Texas’ Galveston Bay, the company said it could reach FID for Rio Grande with another 9 mmty of capacity sold under long-term contracts. NextDecade is looking to shore up more LNG contracts and financing within the next few months, but the company said it still anticipates making an FID “on a minimum of two trains” for Rio Grande LNG in the second half of this year.
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