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Shell enters into 20-year deal with Rio Grande LNG

The liquefied natural gas arm of oil giant Shell has become the first customer at NextDecade’s proposed $15 billion Rio Grande LNG export terminal at the Port of Brownsville.

NextDecade announced the 20-year sale and purchase agreement at the LNG2019 conference in Shanghai on Monday night.

Under the deal, Shell will buy 2 million metric tons of LNG per year from the proposed Brownsville facility starting in 2023.

“We are honored to have Shell as the first foundation customer of our Rio Grande LNG project,” NextDecade CEO Matt Schatzman said in a statement. “Shell is not only the largest portfolio LNG company in the world, Shell is also a recognized pioneer in the global LNG business.”

Proposed Project: NextDecade lands state permit for Rio Grande LNG project

NextDecade has already obtained a state permit but is still seeking permission from the Federal Energy Regulatory Commission to build a liquefied natural gas export terminal along the Brownsville Ship Channel.

A federal permit decision is not expected until July but if approved, the $15 billion facility would generate thousands of construction jobs and be capable of producing up to 27 million metric tons of LNG per year once complete.

Rio Grande LNG and two similar export terminals proposed to be built at the Port of Brownsville face stiff opposition from a coalition of environmentalists, Native Americans, shrimpers, fishermen and concerned residents working under the banner of Save RGV From LNG.

Despite hundreds of comments filed in opposition to Rio Grande LNG, NextDecade has taken several steps forward including signing a power purchase agreement and a lease with the Port of Brownsville.

Founded in 2010 and headquartered in downtown Houston, NextDecade employs 36 people and 11 contractors. The company reported closing 2018 with a $43.5 million loss and no revenue.

With no plants or facilities in operation, NextDecade has thus far, been funded by investors – similar to other LNG companies waiting on permit decisions. A filing with the U.S. Securities and Exchange Commission show that the Houston company is still in the black with at least $3.2 million cash on hand and another $72 million in a highly liquid short-term cash management fund.

Photo of Sergio Chapa
Sergio Chapa

Sergio Chapa covers the oil & gas industry for the Houston Chronicle and writes for Texas Inc., a weekly Monday insert dedicated to covering the most powerful business leaders in Texas. Sergio was born and raised in the Lone Star State and studied journalism at the University of Texas at Austin. He previously worked at the San Antonio Business Journal, KGBT-TV in the Rio Grande Valley and Al Día in Dallas.

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