Page 5 - EurOil Week 46 2021

EurOil COMMENTARY EurOil

produced from shale gas. Hydraulic fracturing, agreements. However, from Engie’s perspective,
a technique used to produce oil and gas from it is perhaps not surprising that the French com-
shale formations, is banned in France, and the pany would want to avoid being too vocal about
move was seen as a signal that the country also the agreement.
opposed its use elsewhere.
Interestingly, the collapse of talks between What next?
Engie and NextDecade had come despite the Engie’s deal could be good news for other US
US company touting the steps it was planning to producers of LNG, who also risked coming
take to reduce greenhouse gas (GHG) emissions under fire from opponents of shale gas devel-
dramatically at its proposed Rio Grande LNG opment. It may not help NextDecade with the
terminal. Last year, NextDecade announced development of Rio Grande LNG, however, or
it had redesigned the project to cut its carbon at least not in the short term. The company now
dioxide (CO2) equivalent emissions by 90% and faces having the project tied up in additional
that it was working to address the final 10% of regulatory processes after a court ordered in
emissions. August that the US Federal Energy Regulatory
Further details of NextDecade’s plans have Commission (FERC) review its approval of the
since emerged, and earlier in 2021 it began to project and another one that is proposed for the
advance plans for a carbon capture and storage same region.
(CCS) project that would be used to capture The federal court said the regulator had not
the majority of emissions from Rio Grande adequately explained its approach in evaluating
LNG. However, by this stage, Engie had already the potential impacts of the projects on climate
walked away from talks over a potential supply change and environmental justice communities.
deal, despite NextDecade’s efforts to present Rio The court order does not spell the end of the road
Grande as a more environmentally friendly LNG for the projects, though, and it is possible that
option than other Gulf Coast export plants. NextDecade will benefit from the work it has
Now, though, it appears that Engie’s priorities done to reduce emissions from Rio Grande LNG
have changed. The deal came before concerns when FERC revisits its approval for the project.
emerged in Europe over a looming gas supply However, the court order still means a delay
crisis, but demand and prices had already risen to NextDecade’s efforts to advance Rio Grande,
last winter amid supply shortages, serving as a and in the meantime, buyers could turn to pro-
warning to buyers as they planned ahead for this jects with less regulatory uncertainty. Indeed,
winter and beyond. Cheniere – as the largest US producer and
No reason has been disclosed for the fact exporter of LNG – appears particularly well-po-
that the deal was not announced at the time it sitioned to attract buyers, as the Engie deal and
was struck, in contrast with Cheniere’s other other offtake agreements illustrate. ™

Week 46 18•November•2021 www. NEWSBASE .com P5