There are a handful of “renewable” headlines in today's daily report, and it is probably worthwhile discussing the differences. First; the linked Gevo RNG announcement is likely one of several RNG projects that we will see come online in 2022, as there are a number of farm-based RNG projects underway in the US and other parts of the world. The Gevo facility is based on farm manure and is expected to produce 355,000 MMBtu of RNG per year. As such it is not large, and all of the farm-based projects are small in the larger context of the natural gas markets. However, when focused on decarbonizing a specific product or process this RNG can be very important. Our take on the market is that there will likely be more demand for RNG than supply, as several companies are looking for RNG to make proposed investments make sense from a “green” perspective (Monolith would be a good example). This suggests that it will be better to be a seller than a buyer longer-term.
Source: NGI, Cameron LNG, February 2022
Cameron LNG is talking about renewable power as a way to lower the carbon footprint of its LNG – as opposed to using RNG – the challenge for Cameron and other LNG producers is that their power consumption for liquefaction is very high and the amount of renewable power needed to run the entire facility might overwhelm the renewable power supply on the Gulf Coast, especially if other LNG producers follow the same route. Of course, if Cameron can use 10% renewable power its LNG will have a lower carbon footprint than others. Texas LNG producers may have an advantage over Louisiana LNG producers as there is much more renewable power in Texas. This would benefit Freeport LNG and Cheniere.
