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NextDecade enters responsibly sourced gas effort in pilot tied to US LNG facility

Highlights

Project Canary to certify proposed terminal's supply chain

European utilities want GHG assurances about US shale

Houston — NextDecade will have the greenhouse gas intensity of the LNG to be produced at its proposed liquefaction terminal in Texas assessed, partnering with a Colorado company that is already working with several US gas producers to certify their supplies as responsibly sourced.

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NextDecade's pilot program with Project Canary, announced in a statement April 19, comes as the developer is pursuing an aggressive carbon capture and storage project tied to its yet-to-be sanctioned Rio Grande LNG terminal in Brownsville.

With strict carbon emissions goals, European utilities are being pressured to shy away from signing new deals for importing US shale gas. Amid that undercurrent, several North American terminal developers have been advancing initiatives designed to show that shale gas can bridge the energy transition to greater use of cleaner-burning fuels and aid rather than impede buyers' climate goals.

"This is a 100-foot tsunami that is only 5 feet out of the water," Project Canary CEO Chris Romer said in a telephone interview.

Project Canary has arrangements with over 20 upstream and midstream companies related to its emissions monitoring and certification technology, while at least another 20-30 are in the process of entering similar contracts, Romer said. Project Canary is in conversations with six LNG suppliers, mostly in Europe and Asia, though some also in the US, he said, without identifying the companies.

EQT and Chesapeake Energy are among the US gas producers that have already announced arrangements with Romer's group.

The pilot project with NextDecade will involve monitoring, reporting, and independent third-party measurement and certification of the GHG intensity of LNG to be sold from Rio Grande LNG. The goal includes enabling the development of responsibly sourced natural gas from producers in the Permian Basin and Eagle Ford shale that will be fed to the export terminal.

NextDecade is targeting a final investment decision on the terminal later this year, though Romer said Project Canary's work with NextDecade will start right away. It will deploy its TrustWell certification process to confirm that each element of the natural gas value chain – from the wellhead to the ship at Rio Grande LNG – has achieved low emissions targets and utilized the highest standards of environmental performance and social responsibility.

The idea of responsibly sourced gas has quickly become an attractive message for US producers and infrastructure project developers that want to show they are taking their duty to protect the environment seriously. In EQT 's case, it hopes it can generate a premium for its Appalachian Basin gas if it can validate that its supplies are more environmentally friendly than supplies from other US basins.

Buyers speak

Commercial considerations also could be at play.

France's Engie said in November 2020 that it had halted talks with NextDecade about a supply deal tied to Rio Grande LNG.

In NextDecade's statement, CEO Matt Schatzman said the pilot with Project Canary "will provide transparency and give confidence to our customers" about Rio Grande LNG's environmental stewardship.

NextDecade's aggressive GHG reduction and certification efforts could bring buyers back to the table.

"The very first thing the LNG purchasers have said to us is it's not just carbon/methane intensity," Romer said. "It's that they don't want to buy net zero gas from a pad in the Marcellus or Permian where the fracked fluids and produced water are polluting the river, or the ozone in that air basin is hurting children at the local school."