US NextDecade Signs up Bechtel for LNG EPC
US LNG project developer NextDecade has signed two contracts with Bechtel Oil Gas & Chemicals for the engineering, procurement, and construction (EPC) of its up-to-16mn metric tons/yr Rio Grande LNG project in Brownsville, Texas, it said May 28. The fully wrapped lump-sum turnkey EPC contracts include cost, schedule, and performance guarantees.
The project will be supplied with gas from the Permian, which at the moment is some of the lowest-cost gas in the US; and also being in Texas, pipelines to the plant will not need federal energy regulatory approval.
The EPC contracts are for the first phase of the Rio Grande LNG project, which consists of two or three liquefaction trains; two 180,000 m³ storage tanks; and two marine berths. This will all cost $9.565bn. Each train is expected to have capacity up to 5.87mn mt/yr and generate an EPC cost of about $543/mt for the first three trains, NextDecade said.
“We are pleased to be working with Bechtel, who is responsible for constructing about 30% of the world’s LNG capacity,” said CEO Matt Schatzman. “Bechtel’s extensive experience developing LNG projects on the US Gulf Coast, along with our advantaged site and technology choices, including Air Products C3MR and Baker Hughes GE rotating equipment, is expected to enable NextDecade – in just the first three trains – to have the lowest cost per ton greenfield LNG project built on the US Gulf Coast under a fully wrapped lump-sum turnkey EPC contract.”
The EPC contracts include full site preparation activities, which are expected to further reduce the costs per ton of the remaining trains to below the first phase cost of $543/mt. In addition, the EPC contracts give NextDecade the option of deciding whether the first phase of Rio Grande LNG will have two or three trains. Bechtel will perform limited notice to proceed activities from June 1, 2019 to January 1, 2020 and has agreed to accept up to $15mn in NextDecade common stock in consideration for certain activities, NextDecade said.
Bechtel said it had delivered 14 large-scale LNG trains in just the last four years. Some of these will have been for Cheniere's projects in Louisiana.
Pending the achievement of further commercial milestones and receipt of final regulatory approvals, NextDecade expects to make a positive final investment decision on "up to three" trains of the Rio Grande LNG project as early as the end of the third quarter of 2019 and to start operations in 2023.