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Brownsville: French Contract Delay Forces NextDecade’s Reform of LNG Project

Feature Illustration: Concept rendering of a proposed LNG export facility at the Port of Brownsville. Courtesy: NextDecade Corp.

Posted: 11-11-2020

by Adolfo Pesquera

Brownsville (Cameron County) — A reluctance by the French government to allow an import deal with Houston-based NextDecade Corporation is forcing the liquefied natural gas (LNG) supplier to reassess its cleaner energy standards and plans to build an export facility at the Port of Brownsville.

On October 7, Natural Gas Intelligence (NGI) reported an operations change at NextDecade, where it was confirmed they would be using carbon capture and storage technology to reduce “carbon dioxide equivalent emissions by about 90%” at its proposed Rio Grande LNG export project in Brownsville.

NextDecade management told NGI they were also exploring options to address the remaining emissions, stating, “Through numerous and ongoing conversations with our customers, it is clear the work we are doing here also aligns with many of our global LNG customers’ corporate values and environmental goals.”

NextDecade plans to make a final investment decision next year on the Brownsville project, which was last reported on by VBX in this April 2019 article. NextDecade is one of three energy companies planning to build LNG export facilities at the Brownsville seaport. The others are Texas LNG Brownsville LLC and Exelon Corp.

NextDecade had already signed a supply deal with Royal Dutch Shell plc, but it needed to sign other deals to get bank financing for construction, NGI reported.

New details came to light on Oct. 21 about NextDecade’s concerns over customers’ “environmental goals” when Politico reported that the French government forced a domestic company, Engie SA, to delay signing a $7 billion, 20-year deal with NextDecade over concerns that their shale natural gas was too dirty.

NextDecade’s project involves the transport by pipeline of gas fromĀ  Permian Basin wells and the Eagle Ford Shale region. But the French government, a part owner of Engie, told its board of directors that U.S. natural gas producers emit too much methane at West Texas oil and gas fields.

Lorette Pilippot, an advocate with French environmental groups that oppose the deal, told Politico the deal could still beĀ  signed, “but what is sure is the political, reputational risk around the validation of the contracts is one of the elements here.”

France is committed to the European Union’s goals to combat climate change through its European Green Deal. This puts Europe at odds with the Trump administration, which rolled back Obama-era limits on methane emissions at oil and gas fields; about 1.4 million metric tons of methane escape from the Permian Basin alone, according to the Environmental Defense Fund.

The next turn of events came to light Nov. 3 when S&P Global Platts reported that Engie had halted talks over the proposed agreement with NextDecade.

“Engie has decided not to proceed with commercial discussions with NextDecade on this gas supply project,” the company said in emailed comments to S&P Global Platts. “We will not be making any further comment.”

The Royal Dutch Shell deal for 2 million mt/year is still intact, but NextDecade has said it needs to sell another 9 million mt/year to achieve its final investment decision.


adolfo@virtualbx.com

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By |2020-11-11T11:04:55-06:00November 11th, 2020|Feature Story, Industry News|

About the Author:

Adolfo Pesquera (Reporter/Editor) is a veteran news journalist. He has worked for Hearst Corp., American Lawyer Media, News Corp and Freedom Communications. His work has been published in newspapers and magazines across the USA. He is a journalism graduate of UT-RGV. He writes, edits and creates digital pages for VBX.

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