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NextDecade pursuing carbon capture project tied to proposed Rio Grande LNG

Highlights

Reduction of CO2 emissions by over 90% touted

FID on Texas export terminal targeted for 2021

Houston — NextDecade launched an aggressive carbon capture project March 18 tied to its proposed Rio Grande liquefaction terminal in Texas.

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The developer said in a statement that it agreed to sell preferred stock to a group of investment firms to help advance work of the carbon capture project, as well as finalize commercial agreements needed to be able to sanction the up to 27 million mt/year export terminal later this year.

For months, it has been pursuing ways to make Rio Grande LNG more environmentally friendly. Those efforts have come during a time in which overseas end-users, especially in Europe, are concerned about how new investments in US shale gas could impact their emission reduction goals.

Multiple operators and developers of US fossil fuel projects have experimented with or implemented technologies that are designed to capture and safely store CO2, to either limit or prevent emissions to the atmosphere. The efforts have been met with mixed success, and in some cases have been prohibitively expensive.

NextDecade believes its NEXT Carbon Solutions CCS project at Rio Grande LNG would be cost-effective and reduce permitted CO2 emissions at the terminal by more than 90% without major design changes to the terminal, the company said. Developing the carbon capture and liquefaction projects at the same time would cost significantly less than building the terminal first and then retrofitting it to include carbon capture equipment, it said.

NextDecade said it expects to make a final investment decision on a minimum of two trains at Rio Grande LNG in 2021 and FID on the carbon capture project soon after.

To date, Shell's 20-year agreement to buy 2 million mt/year of supply from Rio Grande LNG, announced in April 2019, is the only firm ofttake deal tied to the terminal that NextDecade has announced. In November 2020, France's Engie said it halted talks over a potential long-term supply agreement with NextDecade, amid pressure from environmental groups not to import LNG produced from shale gas.

The all-in cost of the carbon capture project, including permanent storage, is expected to be $63-$74/mt of CO2, before any benefit from US tax credits. Including the full benefit of tax credits, the breakeven cost was estimated at $13-$24/mt. NextDecade said it expects to capture and store more than 5 million mt of CO2 a year.

NextDecade did not immediately say how it would fund the carbon capture project beyond the proceeds from the $24.5 million in preferred stock that it agreed to sell to York Capital Management, Avenue Capital Group and Bardin Hill Investment Partners. It scheduled an investor conference call for later March 18.