Exclusive: Morgan Stanley mandated for green ammonia facility
Morgan Stanley is the mandated investment banker for a green ammonia developer that's raising debt and equity for its first facility in Texas.
April 22, 2024
First Ammonia is working with Morgan Stanley as its investment banker as it seeks to raise debt and equity for a flagship green ammonia project in Texas.
The New York City-based developer is moving toward financial close this year on the first 100 MW train of a 300 MW project at the Port of Victoria, Texas. Morgan Stanley has held the mandate since last year, but it has not been previously reported.
First Ammonia did not respond to requests for comment. Morgan Stanley declined to comment.
In an interview last year, First Ammonia CEO said the 100 MW train of the Port of Victoria project is estimated to cost $300m, while the full 300 MW will cost between $900m – $1bn. Each 100 MW module will produce up to 100,000 MTPA of green ammonia.
The project is expected to be the first in First Ammonia’s global pipeline of green ammonia facilities that will eventually add up to 5 million MTPA of production within 10 years.
The firm has contracted with Haldor Topsoe for 5 GW of solid-oxide electrolysis for its project portfolio. It is seeking a partner to provide 45V-compliant renewable energy to power electrolysis at Port of Victoria, as reported exclusively by ReSource.
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Verdagy has entered a strategic agreement to supply electrolyzers to global green hydrogen projects developed by Doral.
Verdagy, an electrolyzer startup, has reached a strategic agreement with Doral, a renewable energy developer, in which Verdagy will supply green hydrogen electrolysis systems to Doral through 2030.
The agreement is global with a focus on green hydrogen projects Doral is developing in Europe, United States, Australia and the Middle East, according to a news release.
“Doral has a proven track record of developing infrastructure-scale renewable energy projects for over 15 years and Verdagy is excited to work together with Doral to drive the transition to green hydrogen,” said Verdagy CEO Marty Neese.
“Verdagy has developed green hydrogen electrolyzers that seamlessly pair in real-time with renewable energy sources, have the highest efficiencies and are cost-effective. With Verdagy’s electrolyzers already operating for several years, we are excited to now use these in our infrastructure scale, green hydrogen projects,” said Doral Hydrogen Managing Director Yam Efrati-Bekerman.
Doral Energy currently has a 16 GW pipeline of renewable projects under development and 14MWh of battery storage in the US and Europe. Since June 2020, Doral Energy is traded on the Tel Aviv Stock Exchange under the ticker symbol: DORL. Doral Hydrogen is the Hydrogen subsidiary of Doral Group to develop, build, and operate green hydrogen and green ammonia projects in the USA, Australia, Europe, and MENA.
The company already operates an HRS in the Netherlands and is developing more than 1GW projects for green hydrogen and ammonia production. Some of the projects will be executed in 2025 and already secured the offtake, the news release states.
Ballard plans to invest approximately $130 million over the next three years.
Vancouver-based Ballard Power Systems has entered into an investment agreement with the government of Anting in Shanghai’s Jiading District to establish its new China headquarters, membrane electrode assembly (MEA) manufacturing facility and R&D center located at the Jiading Hydrogen Port.
The site is near one of China’s leading automotive industry clusters, according to a press release.
Ballard plans to invest approximately $130 million over the next three years, which will enable annual production capacity at the new MEA production facility of approximately 13 million MEAs, which will supply approximately 20,000 engines.
Ballard expects to be able to achieve significant capacity expansion of this facility in future phases with much lower capital requirements. The facility will also include space to assemble approximately 600 engines annually to support the production and sale of Ballard engines in the rail, marine, off-road and stationary markets in China, as well as for certain export markets.
In 2021, Ballard completed its MEA manufacturing expansion in Canada, which is critical as the MEA is the core technology and limiting factor for Ballard’s global fuel cell engine production capabilities. With the new MEA capacity coming online in China, Ballard now expects its global MEA capacity to support total demand requirements through the second half of the decade.
This investment is expected to reduce MEA manufacturing costs, align with China’s fuel cell value chain localization policy, and position Ballard more strongly in the hydrogen fuel cell demonstration cluster regions and for the post-subsidy market, according to the press release.
The facility is planned to be in operation in 2025 to meet expected market demand in China, including from the Weichai-Ballard Joint Venture (WBJV) for the bus, truck and forklift markets, as well as other opportunities outside the WBJV scope. The annual production capacity of the Weichai-Ballard joint venture facility located in Weifang, Shandong is approximately 40,000 stacks and 20,000 engines.
“Our global manufacturing vision for 2030 is to have scaled ‘local for local’ manufacturing of leading fuel cell engines and components in our core regional markets of Europe, North America and China to support future industry growth patterns and volumes across our verticals. In the case of China, we already have volume manufacturing capacity for fuel cell engines, bipolar plates and stack assembly at our WBJV. With our continued high conviction on long-term scaled adoption in China of fuel cell electric vehicles for medium- and heavy-duty motive applications, we are now addressing long-term capacity in that market for our proprietary MEAs,” said Randy MacEwen, Ballard’s CEO. “We believe China is a market headed for a significant demand break-out as hydrogen infrastructure scales over the coming years and as our new MEA production facility comes online.”
“To be competitive in China requires investment in China,” commented Alfred Wong, Ballard China CEO. “This new MEA manufacturing facility will significantly reduce MEA production costs, improve China market access and meet long-term market demand, including providing MEA supply to our Weichai-Ballard JV. We are thrilled to be partnering with Anting, Jiading District, which has quickly become a key hydrogen technology hub in China.”
Ballard will also be setting up an R&D and innovation center at the same site. The center will be focused on MEA research to achieve key corporate technical advancements, support cost reduction initiatives, and engage the emerging China local supply chain for fuel cell materials and components.
Ballard also announced today that it has signed a non-binding memorandum of understanding with Weichai Power whereby Weichai Power plans to make an equity investment for 2% of Ballard’s new MEA manufacturing company.
CF Industries purchased the Waggaman ammonia plant in Louisiana from Incitec Pivot for $1.675bn.
CF Industries Holdings, Inc., a global manufacturer of hydrogen and nitrogen products, has signed a definitive purchase agreement with Incitec Pivot Limited for IPL’s ammonia production complex located in Waggaman, Louisiana, according to a news release.
The facility has a nameplate capacity of 880,000 tons of ammonia annually.
Under the terms of the agreement, CF Industries will purchase the Waggaman ammonia plant and related assets for $1.675bn. The companies will allocate approximately $425m of the purchase price to a long-term ammonia offtake agreement under which CF Industries will supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel subsidiary. CF Industries expects to fund the remaining $1.25bn of the purchase price with cash on hand.
“We are pleased to reach this agreement with Incitec Pivot Limited that benefits from our industry-leading ammonia production capabilities, deploys our capital efficiently and provides long-term value for both companies’ shareholders,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “We believe the Waggaman facility will fit seamlessly into our network, as well as our strategic focus on ammonia as a clean energy source, given its proximity and pipeline connection to our Donaldsonville, Louisiana, Complex, its distribution and logistics flexibility, and its favorable characteristics for the addition of carbon capture and sequestration (CCS) technologies to enable low-carbon ammonia production.”
Ammonia produced at the Waggaman facility today is distributed ratably to three customers, including Dyno Nobel, with approximately 75% used in industrial applications. Based on the nature of the medium- to long-term offtake agreements in place with these customers, CF Industries estimates that the plant will generate gross margin per ton commensurate with its existing ammonia segment prior to synergies, which the company expects to capture through greater capacity utilization and operational and logistics optimization. Over the last five years, CF Industries’ operational capabilities have resulted in ammonia asset utilization that is approximately 10% higher than the average utilization rate of the company’s North American peers.
Additionally, CF Industries anticipates implementing CCS at the site on an accelerated timeline, increasing its network’s low-carbon ammonia production capability, supporting Louisiana’s and the country’s climate goals, and earning 45Q tax credits for sequestered carbon dioxide.
The transaction has been unanimously approved by the boards of directors of both companies and is subject to receipt of certain regulatory approvals and other customary closing conditions.
Goldman Sachs & Co. LLC is serving as the financial advisor to CF Industries on the transaction. Skadden, Arps, Slate, Meagher & Flom LLP is acting as its legal advisor. Latham & Watkins served as legal advisor to the seller while JP Morgan was financial advisor.
About the Waggaman Ammonia Production Complex
The Waggaman, Louisiana, ammonia production complex is situated on an integrated chemicals complex owned by Cornerstone Chemical Company.
Commissioned October 2016
Nameplate capacity: 880,000 tons of ammonia per year
Approximately 90 employees
38,500-ton ammonia storage tank onsite
Ability to load and transport ammonia by NuStar Pipeline, barge, truck and rail
Located in Jefferson Parish on the Mississippi River with potential for vessel loading capabilities for low-carbon ammonia exports
Site is 60 miles southeast of CF Industries’ Donaldsonville Complex, facilitating resource and best practice sharing between the complexes
A New Jersey-based start-up is seeking to commercialize an electrocatalytic technology that transforms CO2 into a monomer for the plastics industry.
RenewCO2 is developing and seeking to commercialize a modular technology that converts waste CO2 into a usable product.
The New Jersey-based company is advancing a pilot project at an Ace Ethanol plant in Wisconsin that will take CO2 and convert it to monoethylene glycol, which can be used by the plastics industry.
The project was recently selected by the US DOE to receive a $500,000 grant. It seeks to demonstrate the technology’s ability to reduce the ethanol plant’s carbon footprint and produce a carbon-negative chemical.
In an interview, RenewCO2 co-founders Anders Laursen and Karin Calvinho said their technology, which was developed at Rutgers University, is geared toward carbon emitters who can not easily pipe away their CO2 and who may have use for the resulting product.
“It’s a matter of economics,” said Calvinho, who serves as the company’s CTO. Using the RenewCO2 technology, the ethanol plant or other user is able to keep 45Q tax incentives for capturing CO2 while also creating a product that generates an additional revenue stream.
Additionally, the modular design of the technology prevents emitters from having to build expensive pipeline infrastructure for CO2, she added. “We want to help to facilitate the use of the CO2 on site,” she said.
One of the goals of the project is to measure the carbon intensity of these technologies in combination, which ultimately depends on the electricity source for the electrochemical process, similar to an electrolyzer, Laursen, who is the CEO, said.
“The main constraint from a location point of view is the availability of reliable and affordable green power,” Laursen added.
Creating a market
The principal target market for RenewCO2’s technology is existing producers of monoethylene glycol (MEG), which is used to make recycled plastics, as well as ethanol producers and other emitters with purified CO2 streams.
Producers of polyethylene terephthalate (PET) – one of the most recycled plastics globally – are also potential customers since they use MEG in their production process and have CO2 sources on site.
“Right now, MEG produced in the US is, for the most part, not polymerized into PET – it’s shipped overseas for making PET plastics used in textiles, and then made into fibers or shipped further,” Laursen said. “So if you can shorten that transport chain, you can reduce the CO2 emissions associated with the final product.”
RenewCO2 is looking for partners to help build the modular units, and is evaluating the purchase of existing PEM electrolyzer units that can be reconfigured, or having the units custom manufactured.
“We’re talking to potential manufacturing partners and evaluating whether we should do the manufacturing ourselves,” Calvinho said. And if they choose the latter route, she added, “we will have to build our own facilities, but it’s early to say.”
The company has raised a total of $10m in venture investment and grant funding, including a pre-seed round of over $2m from Energy Transition Ventures, a Houston-based venture capital fund.
While not currently fundraising, Laursen said they are always taking calls to get to know the investors that are interested in the space. He added that the company may need to raise additional capital in 12 to 18 months.
Canadian midstream giant TC Energy recently unveiled it was pursuing 10 hydrogen projects across North America. To learn more we caught up with Omar Khayum, a vice president at the company in charge of hydrogen project development.
The company is looking to use hydrogen as a means of providing a larger basket of low-carbon solutions to customers, according to Omar Khayum, a TC Energy vice president who is in charge of hydrogen project development. That basket includes mature power generation assets like wind, solar and pumped hydro, Khayum said in an interview, as well as additional firming resources, renewable natural gas, and carbon capture.
“We have a continental platform of customers that are in oil & gas and heavy industry that are looking to decarbonize their existing feedstock,” he said.
TC Energy is partnering with end-use customers, adding capabilities into the partnerships, and sharing in both the risk and benefit of the projects, he said.
“Our incumbency really allows us to partner with end users, and identify customer solutions,” Khayum said. “That’s our business model around de-risking what is a newer form of energy solution.”
Khayum declined to specify where the 10 hydrogen projects are located, other than to say they are proximate to industrial load – existing steelmaking, power plants, chemical facilities and refineries – and are not on the Gulf Coast. TC Energy has announced one project in Alberta which involves an evaluation of its Crossfield gas storage facility and would entail generating 60 tonnes of hydrogen per day with capacity potentially increasing to up to 150 tonnes per day.
In some cases, TC Energy is partnering with the end-use customer to jointly develop the hydrogen projects, Khayum said. “We are the lead developer in most cases but we’re not managing all of the risk ourselves – we’re putting together coalitions with organizations that have upstream and downstream capabilities to make sure we de-risk effectively.”
While conducting project management, TC will use external EPC firms and OEMs to deliver projects, depending on the location and technology in use, Khayum said.
Project funding
As for funding the projects, Khayum said the business model for hydrogen looks similar to the model for liquefied natural gas projects. “We have a wide degree of flexibility in how we can finance projects,” he said, noting the availability of project financing as well as the option to fund projects from TC Energy’s balance sheet.
“We have a number of financial advisors engaged to ensure that as we develop the projects from the offtake agreements to the supply chain agreements – and everywhere in between – those contracts are bankable to provide us the optionality to use project financing,” he said.
Khayum believes that the project finance market is still about 12 months away from being ready to finance hydrogen projects. “That’s because we are one of the early movers in hydrogen development and, as such, we’ll be bringing forward to the marketplace some of the first bankable offtake and supply chain contracts along with risk management tools and activities.”
He noted there was still work to be done among underwriters to validate those contracts for bankability. “We are working over the next year to not only get our projects to FID but working in tandem with our financial advisors to enable the banking system to accommodate those transactions.”
Much of the underwriting requirements have already been well-established in LNG, he noted. “If we can manage risk in a similar fashion,” he added, “we think it will be much more expeditious to achieving a positive FID.”
The Alaska corporation is raising capital to reach FID on a $44bn LNG project that includes the construction of a natural gas pipeline and carbon capture infrastructure.
The Alaska Gasline Development Corporation (AGDC) is actively working to raise $150m in development capital for the Alaska LNG project, with Goldman Sachs providing advisory services.
This capital will cover third-party Front End Engineering Design (FEED) costs, project management, legal and commercial expenses, and overhead for 8 Star Alaska, the entity overseeing the project. Investors will receive a majority interest in both 8 Star Alaska and Alaska LNG as part of the fundraising efforts, according to a presentation.
AGDC, a public corporation of the state of Alaska, is hoping to finalize a deal for development capital in the next 12 months, but has not set a definitive timeline for the fundraise, AGDC’s Tim Fitzpatrick said.
The total cost of the project is estimated at $44bn, according to Fitzpatrick, and consists of three principal infrastructural components:
Arctic Carbon Capture (ACC) Plant: Located in Prudhoe Bay on Alaska’s North Slope, this plant is designed to remove carbon dioxide and hydrogen sulfide before natural gas enters the pipeline.
Natural Gas Pipeline: This 807-mile pipeline, with a 42-inch diameter, connects the ACC plant to the LNG facility and is capable of transporting 3.7 billion ft³/d of natural gas. It includes multiple offtake points for in-state residential, commercial, and industrial use.
Alaska LNG Facility: Situated at tidewater in Nikiski, Alaska, this facility features three liquefaction trains, two loading berths, two 240,000 m³ LNG tanks, and a jetty. It is designed to produce 20 million tons per year of LNG.
Strategies to raise the necessary funds include collaborating with established LNG developers, strategic and financial investors, and possibly forming a consortium, according to the presentation. All project equity will flow through 8 Star Alaska, keeping the legal and commercial structure of the project consistent.
As of last year, the corporation was negotiating sales agreements for a significant portion of the Alaska LNG project’s capacity. Discussions include contracts covering 8 million tonnes per annum (MTPA) at fixed prices and market-linked charges, and equity offtake talks for up to 12 MTPA. Additionally, three traditional Asian utility customers have shown interest in a minimum of 3 MTPA, potentially increasing to 5 MTPA.
These negotiations involve traditional Asian utility buyers, LNG traders, and oil and gas companies, all credit-worthy and large-scale market participants, the company said. Some buyers are contemplating equity offtake, investing at the Final Investment Decision (FID) in exchange for LNG supplied at cost.
A key component of the project’s advancement is securing gas supply agreement terms, identified as a prerequisite by multiple investors. AGDC has held meetings with executives from two major producers to emphasize the need for Gas Supply Precedent Agreements to attract further investment. These discussions, highlighting the project’s importance to Alaska, were joined by key figures including the DOR Commissioner Crum, the DNR Commissioner Boyle, and representatives from Goldman Sachs.
The Japan Energy Summit, sponsored by AGDC, focused on the need for new LNG capacity in Asia. Japan’s Ministry of Economy Trade & Industry (METI) expressed strong support for new LNG investments and offtake, emphasizing the replacement of coal with gas in developing Asian markets.
