Verde Clean Fuels, Inc, based in Houston, and Cottonmouth Ventures LLC, a subsidiary of Diamondback Energy, have jointly announced the execution of a significant Joint Development Agreement (JDA). This agreement outlines the collaborative efforts for the proposed development, construction, and operation of a facility aimed at producing commodity-grade gasoline. The facility will utilize associated natural gas feedstock sourced from Diamondback’s operations in the prolific Permian Basin.

The JDA serves as a crucial stepping stone for the parties involved to progress towards final definitive documents and a Final Investment Decision (FID) for the ambitious project. The JDA delineates the anticipated contracts to be established between the entities, encompassing operating, ground lease, construction, license, and financing agreements. It also lays out conditions precedent to closure, including the Final Investment Decision.

The envisioned project aims to generate around 3,000 barrels per day of fully refined gasoline by employing Verde’s patented STG+ process. Utilizing natural gas from the pipeline-constrained Permian Basin as feedstock, the proposed facility could potentially address the flaring issue by mitigating up to 34 million cubic feet of natural gas per day. Simultaneously, it aims to produce a high-value, marketable product.

Kaes Van’t Hof, President of Diamondback, shared insights into the strategic alignment of this agreement with Diamondback's decarbonization strategy. Additionally, he emphasized the scalability of the project, expressing excitement about the possibility of similar natural gas-to-gasoline facilities across Diamondback’s locations in West Texas. He concluded, "We are proud to partner with Verde to bring this technology to the market."

The proposed facility is slated to be located in Martin County, Texas, strategically situated in the heart of the Permian Basin. Beyond serving as a pivotal project in its own right, it is envisioned as a potential blueprint for additional natural gas-to-gasoline ventures throughout the Permian Basin and other pipeline-constrained basins in the United States. Moreover, the facility could offer solutions for addressing flared or stranded natural gas opportunities on an international scale.

As the energy landscape evolves, the collaboration between Verde Clean Fuels and Cottonmouth Ventures, a subsidiary of Diamondback Energy, stands as a testament to the industry's commitment to innovation, sustainability, and addressing pressing environmental concerns. The proposed facility's potential to not only produce valuable gasoline but also contribute to mitigating natural gas flaring underscores its significance in the broader context of the energy transition. The success of this endeavor could pave the way for similar projects, bringing about positive economic and environmental impacts in the energy sector.