What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-28 · 48 added, 32 removed, 137 unchanged (37% of the section changed)

Our Formation

We were incorporated in Delaware on May 21, 2014, and were formed for the purpose of acquiring, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization, or other similar business combination, one or more businesses or entities.

On July 24, 2017, one of our subsidiaries merged with and into NextDecade LLC, an LNG development company founded in 2010 to develop LNG export projects and associated pipelines. 

Prior to the merger with NextDecade LLC, we had no operations and our assets consisted of cash proceeds received in connection with our initial public offering.

Our common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NEXT.”

Our warrants issued in connection with our initial public offering in 2015 (the “IPO Warrants”) trade on the OTC Pink Market under the symbol “NEXTW.”

Company Overview

Company Overview and Formation

We believe that natural gas in the form of LNG will play an important role in the energy transition, but its contribution to global greenhouse gas emissions must be reduced to an absolute minimum.

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Our management is comprised of a team of industry leaders with extensive experience in the development of major projects.

We have continued to focus our development activities on the Terminal and to undertake various initiatives to evaluate, design, and engineer the Terminal that we expect will result in demand for LNG supply, which would enable us to seek construction financing to develop the Terminal and have expanded into developing CCS projects through NEXT Carbon Solutions.

We have focused our development activities on the Terminal and undertaking various initiatives to evaluate, design, and engineer the Terminal that we expect will result in demand for LNG supply, which would enable us to seek construction financing to develop the Terminal and have expanded into developing CCS projects through NEXT Carbon Solutions.

On July 24, 2017, one of our subsidiaries merged with and into NextDecade LLC, an LNG development company founded in 2010 to develop LNG export projects and associated pipelines. 

Prior to the merger with NextDecade LLC, we had no operations and our assets consisted of cash proceeds received in connection with our initial public offering.

Our common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NEXT.”

Rio Grande is developing the Terminal on a 984-acre site in southern Texas. 

The Terminal, in conjunction with the Terminal CCS Project is designed to offer competitively priced LNG in the global market while emitting what we believe to be a lower level of CO 2 per million tonnes per annum (“mtpa”) of LNG produced than other LNG terminals currently in operation or under construction.

All necessary permits and approvals have been obtained, including the LNG terminal design and the ability to mobilize to site and perform full site preparation and test pilings, pending final FERC notice to proceed.

All necessary permits and approvals to build the Terminal and export LNG have been obtained, including the Terminal design and the ability to mobilize to site and perform full site preparation and test pilings, pending final FERC notice to proceed.

The site has deep-water port access and is supported by area-wide marine infrastructure.

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Engineering, Procurement, and Construction

On May 24, 2019, Rio Grande entered into two lump-sum separated turnkey (“LSTK”) EPC agreements with Bechtel for the construction of (i) two LNG trains with expected aggregate production capacity up to approximately 11.74 mtpa, two 180,000m 3  full containment LNG tanks, one marine loading berth, related utilities and facilities, and all related appurtenances thereto, together with certain additional work options (the “Trains 1 and 2 EPC Agreement”) and (ii) an LNG train with expected production capacity of up to approximately 5.87 mtpa, related utilities and facilities, and all related appurtenances  thereto (the “Train 3 EPC Agreement”

Rio Grande is party to two lump-sum separated turnkey (“LSTK”) EPC agreements with Bechtel for the construction of (i) two LNG trains with expected aggregate production capacity up to approximately 11.74 mtpa, two 180,000m 3  full containment LNG tanks, one marine loading berth, related utilities and facilities, and all related appurtenances thereto, together with certain additional work options (the “Trains 1 and 2 EPC Agreement”) and (ii) an LNG train with expected production capacity of up to approximately 5.87 mtpa, related utilities and facilities, and all related appurtenances  thereto (the “Train 3 EPC Agreement”

and together with the Trains 1 and 2 EPC Agreement, the “EPC Agreements”). 

As of December 31, 2021, we have issued six limited notices to proceed to Bechtel under the Trains 1 and 2 EPC Agreement.

As of December 31, 2022, we have issued eight limited notices to proceed to Bechtel under the Trains 1 and 2 EPC Agreement.

We are continuing commercial discussions with a variety of parties ranging from large utilities and state-sponsored enterprises to portfolio and multinational commodity interests.

Leveraging the global relationships and extensive experience of our management team, we expect to sign long-term binding offtake commitments for substantially all of the Terminal’s capacity, or a subset of the total project liquefaction trains, as applicable, prior to a FID.

Leveraging the global relationships and extensive experience of our management team, we expect to sign long-term binding offtake commitments for substantially all of the project liquefaction train’s capacity prior to a positive FID with respect to such liquefaction trains.

We believe the Terminal’s location will provide customers with access to low-cost natural gas from the Permian Basin and Eagle Ford Shale.

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20 years), meeting the evolving needs of our customers and maximizing our total addressable market.

In March 2019, we entered into a 20-year sale and purchase agreement (the “SPA”) with Shell NA LNG LLC (“Shell”) for the supply of two mtpa of LNG from the Terminal. 

Pursuant to the SPA, Shell will purchase LNG on a FOB basis starting from the date the first liquefaction train of the Terminal that is commercially operable, with approximately three-quarters of the purchased LNG volume indexed to Brent and the remaining volume indexed to domestic United States gas indices, including Henry Hub.

In the first quarter of 2020, the SPA became effective upon the conditions precedent in the SPA being satisfied or waived. 

The SPA obligates Rio Grande to deliver the contracted volumes of LNG to Shell at the FOB delivery point, subject to the first liquefaction train at the Terminal being commercially operable.

As of March 10, 2023, our portfolio of LNG sales and purchase agreements was as follows:

Volume (mtpa)

Tenor (years)

Delivery Model

Shell NA LNG LLC (“Shell”)

ENN LNG Singapore Pte Ltd.

(“ENN”)

(“ENGIE”)

China Gas Hongda Energy Trading Co., LTD (“China Gas”)

Guangdong Energy Group (“Guangdong Energy”)

Exxon Mobil LNG Asia Pacific (“EMLAP”)

Galp Trading S.A.

(“Galp”)

Itochu Corporation (“Itochu”)

weighted average

In the first quarter of 2020, the SPA with Shell became effective upon the conditions precedent in such SPA being satisfied or waived. 

The SPA obligates Rio Grande to deliver the contracted volumes of LNG to Shell at the FOB delivery point, subject to the first liquefaction train at the Terminal becoming commercially operable.  

Each of our other SPAs becomes effective upon the satisfaction of certain conditions precedent, which include a positive final investment decision on the initial phase of the Terminal.

Governmental Permits, Approvals and Authorizations

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Federal law has bifurcated regulatory jurisdiction of LNG export activities.

The FERC has jurisdiction over the siting, construction and permitting of LNG export facilities.

The FERC has jurisdiction to authorize the siting, construction and operation of LNG export facilities.

The DOE has jurisdiction over the import and export of the natural gas commodity, including natural gas in the form of LNG.

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On August 13, 2020, the FERC approved the change of the design for the Terminal from six trains to five trains.

On September 22, 2021, RGLNG received the U.S.

On September 22, 2021, Rio Grande received the U.S.

Army Corps of Engineers Permit issued under CWA Section 404/RHA –

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Circuit did so without vacatur , and accordingly, the Terminal's authorization from the FERC remains legally valid and enforceable. 

 A second appeal was also filed with the same court by the same parties, seeking a review of the FERC letter order amending the Order to account for the design change from six to five trains but the petitioners moved to voluntarily dismiss this appeal on August 23, 2021.

A similar appeal is also pending in the U.S Court of Appeals for the Fifth Circuit in respect to the U.S.

Parties also filed a similar appeal in the U.S.

Court of Appeals for the Fifth Circuit in respect to the U.S.

Army Corps of Engineers permit issued pursuant to Section 404 of the Clean Water Act.

On January 5, 2023, the court fully denied the appeal rejecting each of the challengers’

On November 17, 2021, Rio Grande filed a Limited Amendment with the FERC, seeking authorization to incorporate carbon capture and storage systems, which would enable Rio Grande to voluntarily capture and sequester at least 90% of the CO 2  generated at the Terminal. 

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Environmental Protection Agency (“EPA”) and relevant Texas agencies via the existing underground injection control (“UIC”) Class VI permitting regime for geologic sequestration of CO 2 .

The proposed Terminal site will be located near Brownsville, Texas, benefiting from close access to gas supply from the Permian Basin and Eagle Ford Shale.

On October 14, 2022, Rio Grande received from FERC a two-year extension of time, until November 22, 2028, to complete construction of the Terminal and place it into service. 

Rio Grande’s initial order had required that Rio Grande complete construction of the Terminal within seven years of the date of the Order, by November 22, 2026. 

Rio Grande sought an extension of this deadline, explaining to FERC that despite NextDecade’s efforts to develop the Terminal, the COVID-19 pandemic impacted NextDecade’s ability to secure sufficient offtake agreements to reach a positive investment decision and commence construction of the Terminal. 

FERC found that this demonstrated good cause existed to extend the commencement of construction deadline, and accordingly approved Rio Grande’s request.

The proposed Terminal site is located near Brownsville, Texas, benefiting from close access to gas supply from the Permian Basin and Eagle Ford Shale.

We expect to realize material benefits from providing our customers with access to these low-cost associated gas resources. 

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We believe the Permian Basin will produce very substantial quantities of low-cost natural gas for decades.

We began developing the Rio Bravo Pipeline (the “Pipeline”) to connect Rio Grande LNG to these low-cost associated gas reserves. 

We began developing the Rio Bravo Pipeline (the “Pipeline”) to connect Rio Grande to these low-cost associated gas reserves. 

On March 2, 2020, we completed the sale of Rio Bravo Pipeline Company, LLC (“Rio Bravo”) to Spectra Energy Transmission II, LLC, a wholly owned subsidiary of Enbridge, Inc (“Enbridge”).

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We are continuing to advance substantive negotiations in these areas.

We estimate that development of the Permian and Eagle Ford basins will drive dry gas production in Texas to reach 36 Bcf/d by 2030, which will vastly exceed estimated domestic demand within Texas and exports to Mexico.

Consequently, we believe new LNG projects will be needed to absorb large volumes of natural gas.

To rebalance supply and demand, we estimate Texas may need 9.3 Bcf/d of incremental LNG export capacity by 2030, and at least 6.1 Bcf/d of incremental LNG FIDs, equivalent to 41 mtpa, may be needed within the next 12 months, to support expected Permian Basin and Eagle Ford Shale natural gas production growth.

NEXT Carbon Solutions

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Derived from extensive engineering efforts, our proprietary CCS processes are designed to generate the following benefits as compared to existing applications of carbon capture and storage processes:

Increase the efficiency of CO 2 capture to an expected 95% of emissions generated from a source facility at full capacity;

Lower the cost (both capital and operating expenditures) of post-combustion carbon capture and storage;

Enable CO 2 capture up to an expected 95% of emissions generated from a source facility;

Competitive cost (both capital and operating expenditures) of post-combustion CCS;

Use proven technology and equipment to capture CO 2  emissions at scale;

Reduce energy requirements;

Optimize energy requirements;

Substantially reduce or, in some cases, eliminate consumption of fresh-water compared to post-combustion carbon capture technologies utilizing water to cool the flue gas;

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Due to the unique operational aspects of each customer, we undertake preliminary front-end engineering and design activities in determining optimal designs for CCS integration with each source facility.

NEXT Carbon Solutions' marketing efforts target existing CO 2 source facilities having emissions greater than one million tonnes of CO 2 per annum and that are in close proximity of saline aquifer storage capacity. 

We understand that there are more than 600 facilities in the United States alone that produce more than one million tonnes of CO 2 per annum, representing a very robust addressable market. 

We believe the optimal transportation and storage solution for our customers is a point-to-point solution, whereby, CO 2 captured from a source facility is permanently stored in a dedicated saline aquifer storage site.

Our analysis indicates that source emitters of greater than one million tonnes per annum are sufficient in size to support a point-to-point sequestration model and that there is more than sufficient saline aquifer storage to support our screening criteria.

CO 2 storage hubs also offer an alternative CO 2 storage solution. 

Our analysis indicates that source emitters of greater than one million tonnes per annum are sufficient in size to support a point-to-point sequestration model.

Potential Sources of Value

Value to be derived from integrated deployment of CCS at a source facility include government incentives, such as the Internal Revenue Code Section 45Q tax credit, buildout and marketing of a portfolio of low cost, independently verified carbon credits, and additional sources of value associated with environmental, social, and corporate governance (“ESG”) premiums, blue product marketing, and, in certain potential commercial arrangements, increased market share earned by the source facility following CCS deployment.

Integrated deployment of CCS processes at a source facility has the potential to generate value from a variety of sources including: government incentives, such as the Internal Revenue Code Section 45Q tax credit, buildout and marketing of a portfolio of low cost, independently verified carbon credits, environmental, social, and corporate governance (“ESG”) premiums, blue product marketing, and, in certain potential commercial arrangements, increased market share earned by the source facility following CCS deployment.

We offer prospective customers a variety of commercial structures, aimed at providing sufficient flexibility to meet customers’

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business