America’s liquefied natural gas exporters are unveiling efforts to slash carbon emissions from new facilities as they look to keep new multibillion-dollar projects on track amid mounting climate pressures.
The US has emerged as an LNG export powerhouse in recent years thanks to explosive growth from the country’s shale oil and gasfields, emboldening American claims of energy independence and handing Washington a useful new tool to counter geopolitical foes such as Russia.
But for a handful of companies racing to build new projects that could propel the nation’s exports yet higher, the global crackdown on emissions and heightened focus on methane pollution from US oil and gasfields has threatened to derail their plans.
European efforts to implement a carbon border adjustment tax — which could levy a fee for higher emitting imports — is of particular concern for US LNG companies that compete with Russia, Qatar and others on the continent.
US LNG project developers have looked to counter the threat by rolling out plans to install costly equipment to capture carbon from their facilities, among other measures such as pledging to secure gas only from producers monitoring their own emissions.
LNG project developer Venture Global last week said it plans to install carbon capture and storage equipment that could eventually trap as much as 1m tonnes a year of CO2 from a new $5.8bn export plant it is building on the Gulf Coast in Louisiana and another it hopes to approve this year.
That came after a similar announcement in March from project developer NextDecade, which said it had added plans to capture and store about 90 per cent of the CO2 emissions from its proposed $8bn Rio Grande export site in Texas. It hopes to take a final investment decision on the project this year.
Carbon capture and storage, where CO2 is trapped at the site and piped to natural reservoirs deep underground for storage, is often touted by the oil and gas industry as a way to continue pumping fossil fuels even as the global economy decarbonises.
But carbon capture remains costly and has not yet been deployed widely, making the US LNG proposals a key test for the technology.
NextDecade said it would tap federal tax credits, known as 45Q, available to carbon capture projects to help fund the development, arguing that with the tax credit it would only add marginally to the facility’s production costs.
The International Energy Agency underscored the pressure on the gas industry in a recent report arguing that meeting governments’ net zero targets would mean many LNG facilities under construction would not be needed as demand for the fuel would peak later this decade, far earlier than previous projections.
Ross Wyeno, an LNG analyst at S&P Global Platts, said that unlike in the past any new US LNG export project hoping to get built would “need to include a clear strategy around carbon and methane emissions”.
US gas executives insist that natural gas, especially backed by emissions mitigation, can play a role in the transition to cleaner fuels. Natural gas emits about half as much carbon dioxide when burnt as coal.
“If you want to achieve the largest reductions in emissions, you go after the coal production and use gas to do it . . . and you can achieve massive emissions reductions,” Mike Sabel, chief executive of Venture Global LNG argued at a Financial Times event last week.
But soaring emissions of methane, a highly potent greenhouse gas, and rampant natural gas flaring in America’s oil and gasfields undercuts the fuel’s green credentials.
Last year, the French government intervened to quash a prospective long-term LNG deal worth roughly $7bn between France’s Engie and NextDecade, at least in part over methane pollution concerns for US-produced gas.
“That was one of the first real verifiable signs that this is much more than just talk, and that a lot of these projects really need to address their emissions,” said Wyeno.
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May 30, 2021 at 05:00PM
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US gas export projects pursue emissions cuts to assuage foreign buyers - Financial Times
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