Verde Clean Fuels Selects Chemex Global to provide FEED Services for a Proposed Natural Gas-to-Gasoline Facility in the Permian Basin
Verde Clean Fuels (NASDAQ: VGAS) has selected Chemex Global to lead the front-end engineering and design (FEED) phase for a proposed natural gas-to-gasoline facility in the Permian Basin. This project, developed in partnership with Diamondback Energy's subsidiary Cottonmouth Ventures, aims to convert natural gas using Verde's proprietary STG+ technology. The facility is expected to produce 2,900 barrels per day of gasoline and mitigate flaring of up to 34 million cubic feet of gas daily. FEED work is set to begin now, with completion expected in early 2025, followed by engineering, procurement, and construction phases targeting a 2027 finish.
- Verde Clean Fuels selected Chemex Global to lead the FEED phase, indicating progress in the project.
- The facility aims to produce 2,900 barrels per day of gasoline, representing a significant production capacity.
- The project could mitigate the flaring of up to 34 million cubic feet of natural gas per day.
- FEED work is expected to be completed by early 2025, providing a clear timeline for investors.
- Collaboration with Diamondback Energy's subsidiary strengthens the project's viability and resource access.
- The project's completion is targeted for 2027, indicating a long-term investment with delayed returns.
- Achieving final investment decision (FID) is still pending, posing a potential risk if not secured.
- The project depends on successful completion of the FEED phase, introducing operational risks.
Insights
The announcement regarding Verde Clean Fuels’ selection of Chemex Global to provide FEED services for their natural gas-to-gasoline facility is notable due to its potential environmental and economic impacts. The utilization of Verde’s proprietary STG+® process to convert natural gas into gasoline is a significant development, as it aims to address the issue of natural gas flaring in the Permian Basin. Flaring not only causes environmental concerns but also represents a loss of potential energy resources. By mitigating the flaring of up to 34 million cubic feet of natural gas per day, Verde’s project could have a significant positive impact on both the environment and the energy market.
In terms of economic implications, the project has the potential to add substantial value by converting what is otherwise wasted natural gas into a commercially valuable product. The estimated production capacity of 2,900 barrels per day of gasoline not only represents a direct revenue stream but also demonstrates the scalability of Verde’s technology. Investors should keep in mind the long timeline, with FEED work expected to be completed in early 2025 and construction by 2027. This extended timeframe introduces risks associated with project execution and market conditions that could potentially affect future returns.
Short-term, this announcement may generate investor interest due to the innovative technology and potential environmental benefits. However, long-term success will depend on the execution of the project and the market demand for gasoline. It is essential to monitor the progress of the FEED phase and subsequent steps closely.
The proposed natural gas-to-gasoline facility in the Permian Basin represents a noteworthy advancement in addressing the environmental challenge of natural gas flaring. Flaring is a significant source of greenhouse gas emissions and local air pollution. By converting flared natural gas into gasoline, Verde Clean Fuels is not only reducing waste but also lowering the environmental footprint of natural gas operations. This project aligns with broader policy objectives aimed at reducing greenhouse gas emissions and improving energy efficiency.
The potential to serve as a template for additional projects in other pipeline-constrained basins underscores the scalability of Verde’s technology. However, the success of this initiative will depend on the ability to navigate regulatory approvals and maintain compliance with environmental standards. The project's impact on local communities, ecosystem health and long-term sustainability will be critical factors to watch.
It’s also worth considering the market dynamics for gasoline and how these align with broader trends in renewable energy and decarbonization efforts. The facility’s ability to provide an alternative to flaring while meeting regulatory requirements could set a precedent for similar projects.
From a financial perspective, Verde Clean Fuels’ collaboration with Chemex Global for the FEED services marks a critical milestone in their project development. The successful transition from demonstration to commercial scale in Hillsborough, New Jersey, to Martin County, Texas, indicates a significant scaling opportunity. For investors, the key metrics to watch will be the capital expenditure (CapEx) during the construction phase and the potential return on investment (ROI) upon project completion.
The anticipated 2,900 barrels per day production capacity of gasoline is a pivotal figure. If the project proceeds as planned, it can generate considerable revenue streams. However, investors should remain cautious of the long project timeline, spanning from early 2025 for FEED completion to 2027 for construction completion. During this period, changes in market conditions, regulatory environments and technological advancements could affect the project’s viability and profitability.
Additionally, the partnership with Diamondback Energy through Cottonmouth Ventures is strategically advantageous, leveraging Diamondback’s existing operations in the Permian Basin. Investors should consider the financial stability and track record of both Verde and Diamondback as indicators of the project's potential success.
Overall, while promising, the project's financial success hinges on effective management of risks and adherence to the projected timeline.
Proposed project aims to utilize Verde Clean Fuels’ proprietary STG+® process to convert natural gas from Diamondback Energy’s Permian Basin operations into gasoline
This facility, to be located in
“With the potential to mitigate the flaring of up to 34 million cubic feet of natural gas per day, this proposed project could serve as a template for additional natural gas-to-gasoline projects throughout the Permian Basin and other pipeline-constrained basins in the
“Chemex Global is pleased to be selected as the FEED contractor on this project, and we look forward to partnering with Verde to advance a commercial-scale implementation of its proprietary STG+ technology,” said Chemex Chief Commercial Officer, Matt Rodgers. “It is exciting to work with an innovative company like Verde, and to apply our multidisciplinary modular project execution expertise to this significant opportunity.”
About Verde Clean Fuels, Inc
Verde Clean Fuels, Inc. is a development-stage, renewable energy company focused on the development of commercial production plants to convert syngas, derived from diverse feedstocks including biomass or stranded or flared natural gas into gasoline through its innovative and proprietary liquid fuels technology, the STG+® process. Through its STG+® process, Verde converts syngas into fully finished fuels that require no additional refining, such as Reformulated Blend-stock for Oxygenate Blending (“RBOB”) gasoline. To learn more, please visit www.verdecleanfuels.com.
About Chemex Global, LLC
Chemex Global provides cutting-edge engineering, procurement, and construction solutions, leading the charge in the energy transition. With over 40 years of global expertise, Chemex excels in an integrated team approach, prioritizing safety, quality, and construction-driven planning for exceptional project outcomes.
Headquartered in
Committed to shaping the future of energy and sustainability, Chemex Global stands as a dedicated innovator. For more information, visit www.chemexglobal.com.
Forward-Looking Statements
This press release contains statements believed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than historical facts are forward-looking statements, and include statements regarding the proposed development, construction and operation of the Permian Basin project with Cottonmouth Ventures LLC, the business strategy with respect to this proposed project, projected operations, timelines, plans and objectives of management and anticipated production at the proposed project. Words such as "expect," “could,” “should,” “goal,” “aim,” “may,” "anticipate," "intend," "plan," “ability,” "believe," "seek," "will," "would," “proposed,” “expectation,” “estimate,” “forecast,” “outlook,” “opportunity” or “strategy” or similar expressions are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements.
Although we believe the expectations and forecasts reflected in these forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond Verde’s control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause assumptions and/or actual results to be materially different than those expressed in these forward-looking statements include:
- ability to finalize definitive documents and reach a FID with respect to the project contemplated by the JDA;
- ability to complete and/or commercialize the project contemplated by the JDA;
- ability to complete FEED work in early 2025 and/or EPC work in 2027;
- ability to obtain financing for the proposed facility;
- ability to achieve expected production volumes of approximately 2,900 barrels per day;
- ability to successfully execute on the construction of the facility and enter into third party contracts on contemplated terms;
- fluctuations in commodity prices and the potential for sustained low commodity prices;
- equipment, service or labor price inflation or unavailability;
- legislative, economic, legal or regulatory changes that affect operations; and
- other factors discussed in SEC filings, including Part I, Item 1A – Risk Factors in Verde’s periodic filings with the SEC, including Verde’s Annual Report on From 10-K. Verde’s SEC filings are available publicly on the SEC’s website at http://www.sec.gov.
We caution you not to place undue reliance on forward-looking statements contained in this press release, which speak only as of the date hereof, and neither party undertakes an obligation to update this information.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240604385515/en/
Media Relations:
Juliet Fisher (Merchant)
juliet@merchant.agency
Investor Relations:
Caldwell Bailey (ICR)
verdeIR@icrinc.com
Source: Verde Clean Fuels, Inc.
FAQ
What is the proposed output of Verde Clean Fuels' new facility in the Permian Basin?
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Which company has Verde Clean Fuels selected as the FEED contractor for its new project?
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