NextDecade proposes carbon capture for Texas Rio Grande LNG project

US liquefied natural gas company NextDecade Corp wants to develop a carbon capture and storage (CCS) project at its proposed Rio Grande LNG export plant in Texas.

Rio Grande is one of 14 North American projects awaiting a potential final investment decision in 2021, most of which were carried over from 2020 when just one started construction.

Only one or two projects are expected to go forward this year, including Venture Global LNG's proposed Plaquemines project in Louisiana, but analysts at Cowen & Co said the CCS project "could potentially attract enough customers to sanction Rio Grande."

NextDecade expects the CCS project to reduce permitted carbon dioxide emissions at Rio Grande by more than 90%.

"We are eager to demonstrate the transformative and impactful contributions this business will make to the global energy industry and the quest toward a net-zero future," Matt Schatzman, NextDecade's chief executive, said in a statement on Thursday.

The CCS proposal comes as many countries transition from fossil fuels to cleaner energy sources to prevent global warming. Natural gas is the cleanest fossil fuel and is seen as a bridge to get from coal to renewable energy sources.

Global LNG demand has increased every year since 2012 and hit record highs every year since 2015 due primarily to fast growing demand in Asia.

Analysts expect global LNG demand to grow about 3-5% annually between 2021-2025, which is much slower than the 11%-12% annual increases from 2017-2019.

NextDecade has a contract with engineering company Bechtel Corp to build two liquefaction trains for $7.042 billion or three trains for $9.565 billion. Each train can produce about 5.87 million tonnes per annum of LNG, or about 0.77 billion cubic feet per day of natural gas.