Framework for the final investment in the first phase of the Rio Grand Liquid Natural Gas project, which is designed to produce 27 million metric tons of the low-carbon energy source, has been put into place by NextDecade, Global Infrastructure Partners, and TotalEnergies.
As part of the agreement, Global Infrastructure Partners (GIP) will become a majority investor in the phase and TotalEnergies will hold a nearly 17% share in the investment. Both companies will also have the option to invest in the liquefication trains from the project as well as the planned carbon capture and sequestration projects at the site.
The Rio Grande LNG project, which is set to be located in Brownsville, Texas, originally faced multiple delays and has faced pushback due to its potential environmental impacts. Natural gas, considered a low-emissions fuel, still emits carbon and causes pollution, and the industry is still exploring ways to further lower its emissions. S&P Global has reported that the first phase will cost $11.5 billion.
“With the world increasingly moving toward sustainable solutions, this partnership among GIP, TotalEnergies, and NextDecade reinforces our shared commitment to helping lead the transition and shaping of the future of energy,” said Bayo Ogunlesi, chairman and CEO of Global Infrastructure Partners. “This venture marks a critical step in displacing coal usage and upholds GIP’s commitment to promoting decarbonization, energy security, and energy affordability. Our shared vision with TotalEnergies and NextDecade, combined with our capabilities, will undoubtedly help catalyze the development of cleaner energy.”
TotalEnergies’ Further Investment in LNG and Stock Purchases
In addition to their initial investment, TotalEnergies has agreed to purchase 5.4 million tons of LNG per year from the first phase for 20 years on and has options to purchase LNG from Train 4 and 5. The company has also agreed to acquire in three tranches a 17.5% common stock position in NextDecade, with an aggregate purchase price of $219.4 million.
The first tranche of $40 million NextDecade common stock was sold at $4.98 per share, and the second tranche will be issued and sold at the same price after final investment decisions from the first phase. The third tranche will be issued and sold such that combined stock prices will equal 17.5% of NextDecade’s outstanding common stock after the closing of the third tranche, at the approval of NextDecade shareholders. The company expects to sell 45.1 million shares of common stock to TotalEnergies.
According to NextDecade the Rio Grande LNG project will be the first in the United States to reduce carbon emissions by 90% through carbon capture and storage. The project aims to capture 5 million metric tons of carbon a year. The nearly 1,000-acre site on an uncongested deepwater channel of the Rio Grande will be the largest privately funded infrastructure project in Texas, NextDecade said.