What’s happening at The Ditch?

◀️ ◀️ EAST OF THE DITCH: A couple miles toward Port Isabel from The Ditch, the Rio Grande LNG export terminal is under construction. LNG tankers will be up to 50% bigger than the cargo ships we’ve seen pass by The Ditch historically. So, that means a few more wind shadows floating by the Jetties and Dolphin Cove. (But not passing by the Ditch — the LNG tankers will come and go only from the LNG terminal, without coming further inland.)

📍 AT THE DITCH: The Ditch kite launch site is located on Port of Brownsville property. In the past, some big LNG projects were proposed for this location, but they ended up not moving forward (as is not uncommon for large industrial projects). In the long run, The Ditch launch site is likely to eventually be developed for some kind of industrial use. 😞But that may take a number of years.

🔼 ACROSS FROM THE DITCH: Directly across from the parking and launch site, kiters can see dirt berms/dikes being built up. That land area is also Port of Brownsville property, and the berms are defining placement areas for dredged materials from deepening the shipping channel. The berm across from The Ditch was originally 13 feet high and is being increased to 19 feet.

What is liquefied natural gas?

“Natural gas” is now increasingly called “fossil gas”, to distinguish it from biogas (i.e., methane collected from landfills for use as fuel). Fossil gas is primarily composed of methane (CH4).

To export fossil gas, we liquefy it (at negative 260 degrees Fahrenheit). That way, it takes up 600x less space on a ship. At the ship’s destination, the liquid gets regasified and fed into gas pipelines.

Liquefaction is accomplished by using some of the incoming pipeline gas (~8% of it) as combustion fuel in turbines to produce electricity, which in turn runs compressors. In the case of the Rio Grande LNG facility, the carbon dioxide (CO2) byproduct of that combustion will be captured out of the flue gases and permanently sequestered underground. Carbon capture and storage (CCS) is a relatively new technology to reduce carbon emissions. This feature was added to the Rio Grande LNG project to make the product more attractive to overseas customers (and to the general public) and thus reduce risk.

What is the Rio Grande LNG project?

The facility will receive fossil gas via pipeline from fracking sites in west Texas and the inland Gulf Basin of south/central Texas, for tanker shipping to Europe and Asia.

The project was publicly announced in 2016, received its U.S. Department of Energy export permit in 2020, and Federal Energy Regulatory Commission (FERC) approval in April 2023. The four-person FERC commission voted 3-to-1 in favor of allowing the project to move forward. The “no” vote was a Democrat who was appointed by Trump (yes, that’s right).

Financial closing was in July 2023 (i.e., all the $18 billion in equity and debt financing arranged), and groundbreaking in October 2023. Initial commercial operation scheduled for the end of 2027.

Once built, Phase 1 of Rio Grande LNG will be the 4th or 6th largest LNG terminal in the U.S., depending on when all the other in-process facilities around the country are completed. The biggest LNG export terminals are located on the Gulf coast between western Louisiana and Corpus Christi.

Why so much gas?

Today, there are seven LNG export terminals in the United States. Together, they export about 17% of all fossil gas we produce. In addition, there are five more LNG export terminals under construction (including Rio Grande LNG); once those five are complete, the U.S. will be exporting some 25% of all gas it produces. Finally, there are eleven more LNG export terminals approved but not under construction (including a Phase 2 of the Rio Grande LNG project); if those are completed, we will be exporting some 30% of the gas we produce.

The U.S. only starting exporting LNG in 2016. Before that, LNG exports were zero. As of 2023, we are the biggest LNG exporter in the world.

What’s behind that radical reversal is the shale gas revolution. Innovation in horizontal drilling technology made fracking possible. Thus, gas tightly trapped in deep rock formations suddenly became accessible and cheap. Production of shale gas boomed from one million cubic feet in 2006 to ten million in 2012 and thirty-four million in 2023. Abundant supply caused fossil gas prices to collapse in 2009, dropping 80% in nine months. Exporting cheap gas became a demand solution and profit opportunity, with geopolitical co-benefits.

In January 2024, the Biden Administration placed a temporary halt on approving additional LNG export projects. (The five projects under construction and the eleven projects already approved are not affected by this pause.) Regulators and economists need time to study the consequences of such a dramatic increase in fossil gas exports — from the perspective of U.S. energy security/independence, impact on fossil gas market prices (prices that you and I would end up paying), and compliance with commitments to reduce greenhouse gas emissions.

Criticisms of LNG facilities in the Brownsville shipping channel

LNG project proposals in the shipping channel have been contentious. But, in the end, the Rio Grande LNG project is moving forward. Opposition arguments boil down to four main issues:

1. 🐈 NATURE. Migratory birds, endangered ocelots, biodiversity hotspot, air quality, proximity to indigenous land. Also, recreation access, noise, truck and ship traffic.

2. 🌡️ CLIMATE.

· Fossil gas fuel is better than Europe and Asia burning their 1000-year reserves of coal — especially once we clean up the upstream gas sector in the U.S. (which is underway through new regulations on fugitive methane emissions). Also, those regions likely minimize carbon emissions when using imported LNG, by turning it into clean burning “blue” hydrogen or capturing post-combustion CO2 using CCS.

· But fossil gas is not zero-emission. So, we worry about it becoming a crutch that delays the energy transition.

3. 🌐ENERGY RESOURCE DEPLETION. Are we going to run out of fossil gas and regret having sold it overseas? Probably not.

· The U.S. currently has about 50 years of technically recoverable fossil gas resources. This assumes all approved LNG export capacity gets built and domestic consumption does not decline. However, domestic consumption must eventually decline if we are to meet existing greenhouse gas reduction commitments. Also, additional recoverable resources may continue to be discovered, as has been the case in the past.

· But it is reasonable to hit the “pause” button and study the issue. Hence the temporary halt on issuing more new permits.

4. 💰 GOVERNMENT SUBSIDIES. One SPI local told me they are against the project primarily because it is government subsidized (as they are against SpaceX for the same reason). Is LNG subsidized? Well, yes.

· The Oil&Gas industry is famously subsidized relative to other industries — in the form of tax breaks (special deductions, special depreciation schedules, a special tax-exempt corporate structure option).

· In addition, when people say it’s subsidized, they are often referring to the implicit subsidy in the form of a lack of regulations charging for the environmental damage caused by O&G operations and by the end use of O&G products.

· Finally, CCS technology (which the Rio Grande LNG facility design incorporates) is directly subsidized (tax credits, federal R&D spending) to accelerate development of this important decarbonization method.