McDermott, Saipem to partner for planned Rio Grande LNG project

David Dickson, president and CEO of McDermott, said, “pursuant to NextDecade’s competitive process, we plan to submit our joint EPC proposal in the second quarter of 2019.” International, Inc. has announced that it plans to partner with the Italian oil and gas industry contractor Saipem to bid for NextDecade’s planned Rio Grande LNG project in Brownsville, Texas. NextDecade has previously disclosed it expects to achieve a final investment decision on the project in the third quarter of 2019. The project received the draft environmental impact statement (EIS) from the United States Federal Energy Regulatory Commission (FERC) earlier this month. FERC is scheduled to issue the final EIS on April 26, 2019. The Rio Grande LNG project is planned to have a 27 mtpa production capacity at peak. it will be fed by a 4.5 Bcf/d Rio Bravo pipeline that would deliver natural gas from the Agua Dulce area to the terminal in Brownsville. “Our joint bid with Saipem will feature optimized execution strategies that result in increased certainty on schedule and cost as compared to other LNG projects on the U.S. Gulf Coast,” said David Dickson, president and CEO of McDermott.

McDermott International (NYSE:MDR) says it plans to partner with Italian oil and gas industry contractor Saipem (OTCPK:SAPMF, OTCPK:SAPMY) to bid for engineeering, procurement and construction work for NextDecade’s (NASDAQ:NEXT) planned Rio Grande LNG export terminal in Brownsville, Tex. NEXT said in April that it would submit the job to a competitive bidding process, citing MDR’s need to secure a joint venture partner in order to successfully execute and financially guarantee a project of Rio Grande LNG’s size and scope. “Pursuant to NextDecade’s competitive process, we plan to submit our joint EPC proposal in the second quarter of 2019.” Rio Grande LNG is planned to have a 27 metric tons/year production capacity at peak, and would be fed by a 4.5B cf/day Rio Bravo pipeline that would deliver natural gas from the Agua Dulce area to the terminal in Brownsville. NextDecade has previously disclosed it expects to achieve a final investment decision on the project in the third quarter of 2019.

The two companies had originally planned by the end of this year’s second quarter to sign a lump-sum turnkey EPC contract for construction of Rio Grande, but now believe McDermott will have to secure a joint-venture partner to successfully execute and financially guarantee the project. To maintain Rio Grande’s 2023 projected commercial operations date, NextDecade has launched a competitive EPC bid process. This process will provide NextDecade with front-end engineering and design verification and a final lump-sum turnkey EPC contract based on Rio Grande’s existing FEED, completed in late 2017 by McDermott.

NextDecade has invited Bechtel Corp., Fluor Corp., and McDermott to bid on the contract, which it anticipates executing in third-quarter 2019, stipulating that McDermott will have to secure a joint-venture partner. The US Federal Energy Regulatory Commission will issue its final environmental impact statement on Rio Grande and the associated Rio Bravo pipeline, originating near the Agua Dulce hub, on Apr. 26, 2019, based on issuance of a draft EIS in October. Based on this timing, FERC has established a 90-day federal authorization deadline for Rio Grande of July 25, 2019, in line with NextDecade’s anticipation of make a final investment decision in third-quarter 2019. Rio Grande will use Air Products & Chemicals Inc.’s propane precooled mixed refrigerant (C3MR) liquefaction process, Baker Hughes GE compression, and ABB automation and electricals. NextDecade also announced that Ivan van der Walt has joined the company as project manager, Rio Grande LNG. Van der Walt will oversee all aspects of project development, including the competitive EPC process. He will report directly to NextDecade’s Chief Executive Officer Matt Schatzman, effective Oct. 1, until a new chief operating officer is named. Current COO Rene van Vliet has announced his retirement effective that date. Van der Walt has nearly 25 years’ experience in the oil and gas industry, including senior roles with CB&I (now McDermott) and Chevron Corp.

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