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Freeport LNG to develop CCS in move to compete in low-carbon export market

Highlights

First carbon dioxide injection scheduled by late 2024

Facility has 30-year injection term, permanent storage

CCS faces competition from RSG, technical challenges

Freeport LNG and Talos Energy plan to build carbon capture and storage facilities along the US Gulf Coast, a move that could see Freeport become among the first LNG exporters to use the technology as it looks to compete with nearby terminals in Louisiana, some of which could soon offer exports of certified gas from the nearby Haynesville Shale.

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The letter of intent signed by the two companies, announced Nov. 15, would see construction of the Freeport LNG CCS project at a location immediately adjacent to the facility's natural gas pretreatment facilities at Freeport, Texas. The first CO2 injection could come as early as year-end 2024, according to a joint statement from the companies.

The project plans to utilize Freeport LNG's owned geological sequestration site located less than half a mile from the point of capture. The site has an up to 30-year injection term and would permanently store the captured carbon dioxide. Talos will be the project manager and operator, joined by its partner, Storegga Geotechnologies.

Freeport LNG is currently developing a fourth train at its export terminal that could boost CCS demand there along with possible additional demand from nearby industrial facilities on the Texas Gulf Coast.

Export competition

Announcement of Freeport LNG's plan to develop CCS technology at its export terminal comes as US natural gas producers and midstream operators have begun pursuing their own cleaned-up version of the industry's traditional product – certified low-carbon gas.

In Appalachia, EQT, Southwestern Energy, Antero Resources, Range Resources, Chesapeake Energy and Seneca Resources have committed to certifying some or all of their production in accordance with various methane and ESG standards developed by Project Canary, MIQ and/or Equitable Origin.

In the Haynesville, producers including Chesapeake Energy and Comstock Resources have publicly committed to certifying a total of 4 Bcf/d, or about 30%, of current Haynesville production by mid-2022, putting certified gas supply within close proximity of Louisiana's Gulf Coast export terminals.

At Cheniere Energy's Sabine Pass, Cameron LNG and Venture Global's soon-to-be-operational Calcasieu Pass, the purported delivery of physical, certified molecules from the Haynesville could garner additional credibility from the basin's direct access to Tennessee Gas Pipeline and DTE Midstream's LEAP project – both of which have announced plans to pursue midstream certification standards.

CCS challenges

While adding carbon capture and storage could prove to be a competitive advantage for Freeport, the strategy is not without risk.

Earlier this week, Chevron Australia announced that the company will acquire and retire 5.23 million greenhouse gas offsets to make up for a shortfall in expected carbon dioxide injections at the company's Gorgon LNG export facility.

As a condition of Gorgon's regulatory approval, Chevron and joint venture partners Shell and ExxonMobil previously committed to five-year rolling average CO2 capture rate of at least 80% from the date of Gorgon's startup in March 2016.

A series of setbacks at the CCS site prevented first CO2 injection at Gorgon until August 2019. In the two years since, its CCS facility was expected to inject about 4 million mt/year of CO2 equivalent. So far, the Gorgon CCS facility has injected just 5.5 million mt of carbon dioxide.