After court axes permit, NextDecade pulls back ‘not sufficiently developed’ CCS application for US LNG project

Houston-headquartered energy player NextDecade Corporation has made a move to retract an application made to the Federal Energy Regulatory Commission (FERC) for a proposed carbon capture and storage (CCS) project envisioned to be deployed as a way to curb the carbon footprint of its liquefied natural gas (LNG) export terminal located at the Port of Brownsville, Texas.

NextDecade is determined to bring its Rio Grande LNG project, consisting of the Rio Grande terminal and Rio Bravo pipeline, to life on the northern shore of the Brownsville Shipping Channel in Cameron County, Texas. Once the firm’s subsidiary, Rio Grande LNG, published a final environmental impact statement (EIS), FERC greenlighted the project in November 2019.

In response, environmental groups, residents, and the nearby city of Port Isabel sought a rehearing of the authorization order, arguing that FERC’s analyses of the projects’ ozone emissions and impacts on climate change and environmental justice communities were inadequate and flawed under National Environmental Policy Act (NEPA) and the Administrative Procedure Act (APA).

After the rehearing request was denied, the climate activists turned to the U.S. Court of Appeals for the D.C. Circuit to challenge the authorization order, which led to a ruling on August 3, 2021, that problematized FERC’s decision to examine environmental justice impacts within only a two-mile radius of the projects when some impacts would extend beyond that area.

Afterward, a proposal was made for the Rio Grande LNG project to add a CCS system to its terminal design in November 2021 to remove carbon dioxide emissions during natural gas liquefaction and then transport those emissions by pipeline to a U.S. Environmental Protection Agency (EPA)- and state-authorized underground injection well for sequestration.

As the projections showed the system would capture at least 90% of the carbon dioxide produced at the terminal, FERC was asked to consider the CCS proposal alongside the reauthorization of the existing project. The environmental assessment of the CCS system, anticipated in May 2023, got suspended after what was described as Rio Grande’s failure to provide “complete and timely responses” to several data requests by the agency.

The suspension did not detract FERC from issuing an order to reauthorize the project on April 21, 2023, sparking environmentalists’ ire and resulting in another denied request for rehearing, following which the climate campaigners asked the court to review the remand order on July 10, 2023. FERC sustained the reauthorizations on October 27, 2023.

Following its probe into the case, the U.S. Court of Appeals for the D.C. Circuit ruled in August 2024 to vacate the Federal Energy Regulatory Commission’s reauthorization of the Rio Grande LNG project, deciding to remand its decision to FERC for further proceedings.

The judges underlined the need for a supplemental EIS, finding fault with several other aspects of FERC’s reauthorization order, including its failure to review the CCS addition that was proposed at one point for the Rio Grande LNG terminal as either a connected action or a project alternative. At the time, NextDecade expressed disappointment with the court’s decision and disagreed with its conclusions, emphasizing its intention to review the ruling and assess all options.

However, in an update on August 20, the firm disclosed that its subsidiary withdrew its application to the Federal Energy Regulatory Commission for the proposed CCS project at the Rio Grande LNG facility and requested that the FERC terminate the CCS proceeding.

While elaborating on the withdrawal, Matt Schatzman, NextDecade’s Chairman and CEO, underlined: “We appreciate the FERC’s diligence during the review process. The CCS project at RGLNG is not sufficiently developed to allow FERC review to continue at this time.

“We remain committed to advancing and lowering the cost of utilizing carbon capture and storage and helping companies reduce their facility emissions and achieving their clean energy goals.”

Following the final investment decision, reached in July 2023 when Bechtel got its second green light in three months to proceed with full construction of the giant LNG project in Texas, the construction of Phase 1 officially started in October 2023.

Before NextDecade confirmed a multibillion-dollar deal with Bechtel for Train 4 and related infrastructure, a non-binding heads of agreement (HoA) and a sale and purchase deal were secured with Aramco for 1.2 million tonnes per annum (mtpa) of LNG for 20 years on a free-on-board basis, at a price indexed to Henry Hub from Train 4.

This came on the heels of a 20-year LNG offtake agreement with ADNOC, which also secured an equity position in the Rio Grande LNG project. The FID for Train 4 was targeted for the second half of 2024 before the court’s ruling. However, the extent to which the latest setback will affect planned activities for the project is still unclear.