Looking to cash in on energy transition, CNX signs novel low-carbon deal

Appalachian shale gas producer CNX Resources Corp.'s latest "green" deal has the company supplying waste methane to a new factory on the Ohio River that will make a biodegradable plastic used by consumer brand names such as Nike Inc., Target Corp. and hamburger chain Shake Shack Inc.

A unit of midstream and liquefied natural gas operator New Fortress Energy Inc. will buy the methane for the biodegradable plastics plant, operated by Newlight Technologies Inc. at New Fortress' Long Ridge Energy Terminal in Hannibal, Ohio.

Newlight Technologies Inc. will manufacture its AirCarbon biodegradable plastics product at the factory, called AirCarbon-Ohio. The AirCarbon process uses microorganisms found worldwide that can consume greenhouse gases to produce a cellular material similar to plant roots, called polyhydroxybutyrate, or PHB, which can be melted into shapes in the same way plastic can. Newlight said PHB is carbon-negative because the process consumes greenhouse gases, and the resulting PHB degrades naturally.

"We can melt AirCarbon and cool it into everything from fiber and sheet to solid parts, and use it to replace things like synthetic plastic and animal leather," Newlight's website said. One common use of PHB is to make dining utensils for fast food restaurants.

It is the second deal in as many months where CNX gas will be used to create other low-carbon products in Appalachia, and CNX Chief Strategy Officer Donald Rush said July 15 that there is more to come.

"There's an ocean of opportunities in this energy transition," Rush said in an interview. "We look at Appalachia as being able to lead the sustainable energy revolution. Ultimately, [CNX has] assets, we have talent, we have people, we have cash flow. We feel that we can be a major player as this unfolds over the next five to 10 years."

In late May, CNX announced a deal with Pittsburgh International Airport to use dry Utica Shale gas from wells it operates at the airport to create alternative low-carbon fuels and eventually hydrogen.

Under the Newlight deal, CNX will sell waste methane it removes from a Virginia coal mine to a unit of midstream and LNG operator New Fortress Energy Inc. The AirCarbon-Ohio plant will be built on land leased from New Fortress' Long Ridge Energy Terminal in Hannibal, Ohio. Rush said the amount of methane and its sale price would be announced later.

CNX has said it has already reached net-zero for its Scope 1 and 2 emissions because of the amount of methane it removes from coal mines for other companies.

Low-carbon gas pricing is "a little bit like the wild, wild West," Rush said. "There's all kinds of different platforms, whether it's renewable natural gas or the Renewable Fuel Standard programs or you look at the price of carbon, it varies across different markets around the world. So, this low-carbon intensity has valuable components that the world's looking for today."

The deals to repurpose natural gas are the early results of CNX's New Technologies unit, headed by President Ravi Srivastava. The new unit has just started to research and test the hundreds of alternative uses for gas beyond power and heat, Rush said. "We're starting to get a much deeper connection and relationships into that ecosystem. So, in general, different touchpoints and different communications brought us into a conversation."

"We're setting up the company for a world where lower carbon intensity, lower greenhouse gas intensity is not only desired but valued," Rush said. "The way we're approaching the business model is that is to have what the world is clamoring for."

CNX captures the coalbed methane from inside Coronado Global Resources Inc.'s giant Buchanan metallurgical coal mine complex and then resells the gas. Consol Energy Inc., the forerunner of CNX, sold the mine to Coronado in 2016 as Consol spun off coal operations to focus on oil and gas. Consol became CNX in November 2017.

A subsidiary of Fortress Transportation and Infrastructure Investors LLC, which jointly owns the Long Ridge terminal with Grosvenor Capital Management LP, has agreed to fund 25% of AirCarbon-Ohio's project costs up to $75 million.

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