Five companies have announced plans to build natural gas liquefaction and export facilities at the Port of Brownsville.
Those same five firms entered into year-long lease-option agreements with the port in case they actually build something, though the number of lease options down to four now, since the port elected not to renew one of them for a second year.
Now, with the four remaining options scheduled to expire between November and January, port officials are burning to know whether anybody is actually moving forward with a viable plan.
It appears that at least one of the firms, NextDecade LLC, headquartered in Houston, is about to pull away from the pack.
Eddie Campirano, port director and CEO, said renewing the companies’ options for another year depends on their progress in developing LNG plants for freezing and exporting plentiful and cheap natural gas from the Eagle Ford Shale to customers overseas.
There’s a lot of money potentially to be made exporting U.S. natural gas, though developing LNG plants is very expensive and the permitting process extremely rigorous.
“We don’t want to keep tying up land for things that aren’t going to happen,” Campirano said. “Depending on what progress they make we’ll see whether we go forward with them or not.”
Specifically, the port is looking for seriousness-of-purpose in the form of an application to the Federal Energy Regulatory Commission — a lengthy and expensive process that determines whether an LNG plant gets built or not.
“When you make the commitment to pursue your FERC application, at that point you’ve got to commit some very serious dollars,” Campirano said.
Kathleen Eisbrenner, NextDecade’s CEO, said her company, in a partnership with York Capital Management Global Advisors LLC, is preparing to do just that.
On Oct. 13 NextDecade announced that the front-end engineering and design analysis required to pre-file applications with FERC would be complete within the first quarter of 2015.
Eisbrenner said the company is actually shooting for January with the pre-filing, and that its preliminary design phase will launch Nov. 3, probably with Chicago Bridge & Iron Company as the contractor.
NextDecade’s lease option on 500 acres at the port expires within the month, Campirano said, though a meeting is scheduled for Nov. 11 with port officials at NextDecade’s Houston headquarters, Eisbrenner said.
“Absolutely we’ll be able to show the port what they want,” she said. “I very much do understand the port’s interest in seeing something built, not just options. Our intentions are very consistent with what the port is hoping to see.”
Eisbrenner said York’s backing is vital to success in the Brownsville venture, considering the massive expense of the engineering, environmental, regulatory and other work necessary to get through the FERC process.
The cost of development is likely to be between $80 million and $100 million, though that’s nothing compared to the $5 billion to $10 billion it will take to actually build the plant, she said.
FERC permitting will take at least two years, with another three or three-and-a-half years for construction, Eisbrenner said.
She noted that the development process will include a significant community outreach effort, starting around the first of next year.
Eisbrenner thinks NextDecade has a good shot at succeeding with LNG in Brownsville on the basis of its experience with similar projects elsewhere. The company’s team, spread across Texas and The Netherlands, has years of experience developing natural gas and LNG projects around the world, she said. Eisbrenner herself has 30 years in the energy industry.
“We understand the challenges associated with doing it,” she said. “We have assembled a team of partners outside our company, mainly contractors. We have the relations and the agreements with customers that want to buy the LNG long term.”
The company also has experience navigating the “gatekeepers” — FERC, the U.S. Maritime Administration, the U.S. Coast Guard and other regulatory bodies and government agencies, Eisbrenner said.
The project can’t happen without a pipeline to bring the gas to Brownsville. Campirano said an obstacle to energy development at the port has been the lack of such infrastructure south of Corpus Christi, an issue he said LNG companies “would have to figure out.”
Eisbrenner said provisions for a pipeline will be part of what NextDecade presents to FERC — specifically, a 125-mile-long pipeline, 36 to 42 inches in diameter, capable of handling 4 to 8 metric tons of gas per year, or 1 billion cubic feet a day.
The company is planning to build the pipeline itself initially, but also has keen interest from nine different pipeline companies that willing to build it and possibly link to it, she said.
The LNG plant would create thousands of jobs during the construction process, then hundreds of jobs to operate maintain and operate it, she said. The facility would probably load at one ship a week with LNG bound primarily for Asian markets, Eisbrenner said.
Natural gas must be liquefied/shrunk for shipping, which requires chilling it to minus 260 degrees Fahrenheit. In its liquid form, natural gas is 1/600 the volume of its gaseous form. Einbrenner noted that it’s a physical rather than a chemical process.
“We’re not building a refinery,” she said. “It’s a great big refrigerator.”