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Alabama woody biomass facility receives construction permit

US-based woody biomass producer Enviva has received the necessary construction permit to build a new biomass production facility in Alabama.

Enviva, the US-based producer of woody biomass, has received a construction permit from the Alabama Department of Environmental Management (ADEM) for its Epes biomass production plant under construction in Sumter County, according to a news release.

The revised permit enables Enviva to build a state-of-the-art sustainable biomass production facility at a brownfield site in the town of Epes.

In 2020 Enviva acquired over 300 acres of land on the coast of the Tombigbee River in Sumter County for the plant. The site was formerly home to a wood products manufacturing company.

Enviva started preliminary construction of the fully contracted Epes plant in July 2022. The plant is expected to have a nameplate capacity of 1.1 million metric tons per year and is expected to be in service in 2024 and fully ramped in 2025.

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Macquarie invests $325m into green nitrogen developer

Macquarie has made an investment from its energy transition fund into a Swiss-based developer of green nitrogen projects, with facilities under development in the US and Brazil.

Macquarie Asset Management (MAM) and Atlas Agro Holding AG (Atlas Agro) have announced today an up to $325m investment in Atlas Agro and affiliated project entities via the Macquarie GIG Energy Transition Solutions (MGETS) fund, according to a news release.

Atlas Agro is building industrial scale green nitrogen fertilizer plants in the United States and Latin America which will utilize green hydrogen in its production process, in lieu of conventional nitrogen fertilizer production utilizing fossil fuels. Atlas Agro’s innovative business model will produce competitive carbon-free nitrate fertilizers locally in agricultural regions, thereby displacing imported products with a significant carbon footprint from both production and transportation.

“MAM, with their experience in projects and infrastructure, ability to initiate support investments with a wide range of expertise and their commitment to accelerate decarbonization of hard-to-abate-industries, is an ideal partner for us as we approach construction of our first plants in the United States,” said Petter Østbø, CEO of Atlas Agro.

The investment is a significant step towards enabling Atlas Agro’s expansion across the Americas and globally. It will assist the company in realizing its vision of providing a sustainable alternative to conventional fossil-fuel based fertilizer products, which contribute heavily to greenhouse gas (GHG) emissions.

SpareBank 1 Markets AS acted as financial advisor and Homburger AG served as legal counsel to Atlas Agro. Allen & Overy LLP served as legal counsel to Macquarie Asset Management.

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Eversource to record $1.6bn impairment, nears sale of offshore wind stakes

Eversource Energy expects to record an impairment of up to $1.6bn in connection with its offshore wind holdings, and is nearing a deal to divest its ownership of the assets to a global infrastructure investor.

Eversource Energy expects to record a substantial impairment charge in the fourth quarter of 2023, primarily due to increased costs and uncertainties in its offshore wind projects. The company is also in advanced talks to divest its 50% ownership in three major offshore wind projects: South Fork Wind, Revolution Wind, and Sunrise Wind​​.

The anticipated impairment charge, in the range of $1.4 to $1.6bn, arises from revised project construction costs and supply chain constraints, particularly in installation vessels and foundation fabrication. These challenges have led to a significant decrease in the fair value of these projects, according to the company. Additionally, the denial of Sunrise Wind’s petition by the New York State Public Service Commission to amend its Offshore Renewable Energy Credit (OREC) contract has contributed to the impairment. This decision impacts Sunrise Wind’s involvement in New York’s renewable energy solicitation and necessitates renegotiation of the OREC agreement at a revised price, further contributing to the impairment expected to be in the range of $600m to $700m for Sunrise Wind alone​​.

Eversource is negotiating with a leading global private infrastructure investor to sell its stake in these projects. While the final terms are still under discussion, Eversource aims to promptly announce the details upon reaching a definitive agreement. This potential divestiture is subject to regulatory approvals and other conditions, including partnership agreements with Ørsted, Eversource’s joint venture partner​​.

Joe Nolan, Eversource’s Chairman, President, and Chief Executive Officer, commented on the challenges faced by the offshore wind industry, noting significant supply chain disruptions and inflationary pressures.

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Tidewater Midstream and Tidewater Renewables appoint interim CEO

The Canadian company is facing higher estimated costs to build a renewable diesel and hydrogen plant in British Columbia.

The Boards of Directors of Tidewater Midstream and Infrastructure Ltd. and Tidewater Renewables Ltd. have appointed Robert Colcleugh as interim CEO of both companies, effective November 28, 2022, according to a news release.

Colcleugh, who currently serves as a director of Tidewater Midstream, succeeds Joel MacLeod, who is stepping down from his management and board roles to pursue other opportunities.

Tidewater executives including MacLeod said on a recent earnings call that costs would climb an estimated 10% for a renewable diesel and hydrogen plant that’s under construction in British Columbia.

Colcleugh brings significant oil and gas management expertise as well as broad business and capital markets experience to the leadership roles. Thomas Dea will serve as chairman at Tidewater Midstream and Colcleugh will serve as chairman of Tidewater Renewables with Brett Gellner continuing to serve as lead independent director of Tidewater Renewables following Macleod’s departure.

“The business outlook remains strong and both companies are well positioned for continued success,” said Mr. Dea, chairman at Tidewater Midstream. “Under Colcleugh’s leadership, the companies will continue to execute their respective business plans while ensuring they maintain a strong culture of safety, further strengthen their balance sheets, and create value for all constituents. With his significant industry experience and knowledge of the Tidewater business, we have the utmost confidence in his ability to lead the teams and generate shareholder value.”

“We will continue to focus on building a profitable, diversified midstream and infrastructure company at Tidewater Midstream,” said Colcleugh. “At Tidewater Renewables, we will continue to deliver on our commitment to supply North America with low carbon intensity fuel solutions at scale. I look forward to delivering for our valued customers, partners, and shareholders.”

Colcleugh has been a director of Tidewater Midstream since 2017. Over the last 25 years he has held a variety of operational, advisory and board roles at a broad array of domestic Canadian and international energy companies and investment banks.

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Exclusive: Verde Clean Fuels seeking project finance for gas refineries

Publicly listed Verde Clean Fuels plans to seek equity and debt investors for low-carbon gasoline refineries it expects to deploy across the US. We spoke to CEO Ernest Miller about the strategy.

Verde Clean Fuels, a publicly listed developer of clean fuels technology and projects, is planning to seek project debt and equity investors to finance a series of low-carbon gasoline refineries it expects to deploy across the US.

Houston-based Verde, which employs syngas-to-gasoline refining technology, recently announced an agreement with Diamondback Energy to construct a facility in the Permian Basin that will utilize stranded natural gas to produce 3,000 barrels per day of gasoline.

The company is also pursuing a carbon-negative gasoline project on the premises of California Resources’ Net Zero Industrial Park in Bakersfield, California. The California project will produce approximately 500 barrels of RBOB renewable gasoline per day from agricultural waste, while capturing and sequestering around 125,000 tons of CO2 per year.

Verde is capitalized following a private investment in public equity (PIPE) injection of $54m as part of a reverse merger last year, allowing the company to take the Bakersfield and West Texas projects through the FEED phase, CEO Ernest Miller said in an interview.

Underpinning Verde’s business model is the view that gasoline will persist as a transportation fuel for many years to come, and that very few parties are working to decarbonize the gasoline supply chain.

“Between renewable diesel, renewable natural gas, and sustainable aviation fuel, there is very little awareness that renewable gasoline is even a thing,” Miller said. “The addressable market is enormous, and the impact that can be made by taking even a sliver of that market is enormous.”

Miller says that many market participants believe that electric vehicles will solve the emissions problem from road transport.

“The fact is that gasoline has a very, very long runway ahead of it,” he said. “Regardless of the assumptions you want to make about EV penetration, the volume of gasoline that we continue to use for the foreseeable future is huge.”

Verde Clean Fuels demo plant.

Verde’s projects are sized in the 500 – 3,000 barrels per day range, making them a unique player at the smaller end of the production range. The only other companies with similar methanol-to-gas technology are ExxonMobil and Danish-based Topsoe, which operate at a much larger scale, according to Miller.

Miller recognizes that low-carbon, or negative-carbon, gasoline operates within a complex ecosystem, with the California project potentially playing in that state’s LCFS and D3 RIN markets, in addition to the market for gasoline.

“What I would like to see us do is have an offtaker that plays in all three of those products – so if I can go to Shell Trading, or bp, or Vitol, and get one of them to say, ‘here’s a price,’ and they take all of that exposure and optionality,” Miller said, “that allows me to finance the project without having to manage a whole bunch of different commodity exposures and risk.”

Bakersfield 

The Bakersfield project, estimated to cost $235m to build, will utilize 450 tons per day of agricultural waste to produce gasoline, and sequester CO2 via California Resources’ carbon management company, Carbon TerraVault, a joint venture with Brookfield Renewable.

Because of the carbon sequestration, the project will qualify for incentives under 45Q, but since it is producing, in Miller’s words, “deeply carbon-negative gasoline,” most of the value for the project will come from California’s LCFS program.

In order to qualify for LCFS credits, the Bakersfield facility goes through the full GREET modeling process – including transport of feedstock, processing and refining, and transport away from the facility – returning a negative 125 grams equivalent per MJ carbon intensity score for the project, according to Miller.

As for investors, Verde “would like to see both California Resources and Brookfield Renewable in the project, either individually or through the Carbon TerraVault JV,” Miller said.

Verde is also in discussions with a handful of financial players, including infrastructure and pension funds that are looking for bond-like cash flow that a project finance model can provide. The company has also explored the municipal bond market in California, which would bring to bear a favorable capital structure for the project, Miller said.

Verde is not currently working with a project finance advisor, Miller said, noting that they have in-house project finance experience. In Texas, Verde is working with Vinson & Elkins as its law firm; and in California Verde is working with Orrick as counsel.

Gasoline runway

For the Diamondback facility in West Texas, which requires roughly $325m of capex, both Verde and Diamondback will take equity stakes in the project, and Verde will seek to bring in debt financing to fund the rest of the project costs in a non-recourse project finance deal, Miller said.

The Permian project seeks to provide a pathway to monetize stranded gas in the basin by taking advantage of and alleviating its lack of takeaway capacity, which causes gas prices at the Waha Hub in West Texas to trade at a significant discount to the Henry Hub price.

“Diamondback would take the position that any gas that’s getting consumed in the Permian Basin is gas that’s not getting flared in the Permian Basin,” Miller said, thus making the project a emissions-mitigating option. “There will never be enough natural gas takeaway capacity out of the Permian Basin,” he added, noting that driller profiles are only going to get gassier as time goes on.

Diamondback, for example, produces more in the Permian than it can take out via pipeline, therefore “finding a use, a different exposure, for that gas by turning it into gasoline, is of value for them,” Miller said.

“It’s the same dynamic in the Marcellus and Bakken and Uinta – all the pipeline-constrained basins,” he added, alluding to possible future expansion to those basins.

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Exclusive: Northeastern offshore wind sale kicks off

A major European energy firm has retained a banker and launched a process to sell a large portfolio of offshore wind developments in the northeastern US.

Ocean Wind I & II, Orsted’s offshore wind developments in New Jersey amounting to 2.5 GW of capacity, are for sale via an auction, according to two sources familiar with the matter.

Jefferies is the exclusive financial advisor on the sale, which is codenamed Project Hummer, the sources said. The process launched this month.

Denmark-based Orsted had previously halted development of Ocean Wind I and II as impairments on the projects climbed above $5bn. And the sale process comes amid the firm’s broader pullback from the offshore wind sector.

In an earnings call this month, Orsted CEO Mads Nipper said the company had plans to sell up to DKK 115bn (USD 16.6bn) in assets by 2030 as it accelerates divestments to boost its balance sheet.

Orsted also said it would withdraw from offshore wind markets in Norway, Spain and Portugal and cut its target for 2030 installed renewable capacity from 50 GW to 35 – 38 GW.

The company has a preference for a new owner acquiring 100% of both Ocean Wind leases and all associated development assets, the sources said.

Targeted COD for the two developments is 2029 and 2031, while estimated capex for each is USD 7.1bn (98 turbines) and USD 7.7bn (82 turbines), respectively.

New Jersey has accelerated offshore wind solicitation schedules and has recently awarded two contracts for 2.4 GW at $112.50/MWh and 1.3 GW at $131.00/MWh compared to the $98.10/MWh for Ocean Wind I and $84.03/MWh for Ocean Wind II awarded back in 2019 and 2021.

Orsted and Jefferies did not respond to requests for comment.

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Exclusive: Chinese electrolyzer manufacturer seeking US entrance

A Chinese electrolyzer manufacturer is looking for projects to supply with new US-based manufacturing capacity and has its sites on a project in Texas.

HyGreen Energy, the Chinese alkaline and PEM electrolyzer manufacturer, is hoping to supply a Texas hydrogen project with its electrolyzers, sources told ReSource.

The company is in negotiations to contract with Big Hill Materials, which was part of the Horizons Clean Hydrogen Hub (HCH2) application to the US Department of Energy.

The project is a salt dome site in Bay City, Texas, a source said. The hydrogen production site is planned, but unfinalized.

Ideally, HyGreen would like to set up a manufacturing operation to supply a large project like Big Hill, sources said. The company would need outside investment to do so.

Big Hill, which doesn’t appear to have a website, has kept a low profile about its planned projects. Earlier this year, Norway-based Hafnia said it had entered a JV with Big Hill to develop a sustainable hydrocarbon fuels plant to produce blue methanol and eventually SAF. Another report from last month notes that Big Hill has partnered with Avalon for CCS projects.

HyGreen has financial advisors in China, but not the US.

HyGreen declined to comment. Big Hill CEO Nirav Patel declined to comment.
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