U.S. liquefied natural gas (LNG) developer NextDecade Corp. has launched a subsidiary focused on carbon capture and storage (CCS) as it aims to lower the greenhouse gas (GHG) footprint of its proposed export project in South Texas.

The subsidiary, NEXT Carbon Solutions LLC, will develop what NextDecade says is one of the largest CCS projects in North America at the Rio Grande LNG site near Brownsville. NextDecade said Thursday the project can reduce permitted carbon dioxide emissions at Rio Grande LNG by more than 90% without major design changes to the project. 

“The launch of NEXT Carbon Solutions comes at a pivotal time for our nation and the world, and 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,” CEO Matt Schatzman said.

To help fund the project, the company also announced Thursday it had agreed to sell $24.5 million of series C convertible preferred stock in a private placement to funds managed by York Capital Management, Avenue Capital Group and Bardin Hill Investment Partners. Proceeds will also go to finalize commercial agreements needed to achieve the targeted 2021 final investment decision on at least two trains at Rio Grande LNG. The project scope envisages a five-train facility capable of producing 27 million metric tons/year.

Last year, NextDecade announced plans to make Rio Grande LNG carbon neutral after reports surfaced that the French government blocked an offtake deal with utility Engie SA. At the heart of the move were concerns about emissions from hydraulic fracturing in the Permian Basin and Eagle Ford Shale, where NextDecade plans to source its feed gas for the project.

Now, the company claims the CCS project would make Rio Grande LNG “the greenest LNG project in the world” by enabling the capture and permanent geologic storage of more than five million metric tons of carbon dioxide per year. The company also aims to lower emissions associated with the facility by working with Permian and Eagle Ford producers to supply responsibly-sourced natural gas to Rio Grande LNG.

All-in costs of the CCS project, including capital and operating expenses, interest, transportation and permanent storage, are expected to be $63-74/metric ton of carbon dioxide before Section 45Q tax credits. Including the full benefit of tax credits, the breakeven cost of adding CCS to Rio Grande LNG is expected to be $13-24/metric ton of carbon dioxide, or five cents to nine cents/MMBtu on an LNG basis. 

Meanwhile, developing the CCS project at the same time as Rio Grande LNG would result in 60-80% less capital costs than retrofitting an operating LNG facility, NextDecade said. 

“Coupled with its low costs, NextDecade believes that LNG from Rio Grande LNG will be among the greenest and most attractively priced in the world,” the company said.

In addition to the CCS project, the carbon solutions business will be tasked with developing proprietary processes to lower the cost of using CCS technology, help other companies reduce their GHG emissions along the natural gas supply chain, as well as supply them with “high-quality, verifiable carbon offsets”, according to NextDecade.