Project news, Raising capital

Arizona RNG firm seeking equity capital

A renewable natural gas developer with sites proposed in southern California and Arizona is seeking additional equity investors.

April 12, 2023

True North Renewable Energy Company, a Phoenix-based waste-to-energy developer, is undergoing a Series B equity raise, according to two sources familiar with the matter.

Whitehall & Company is advising, the sources said.

True North develops, builds, and operates organics-to-energy facilities, including large, regional, high solids anaerobic digestion infrastructure, according to its website.

The firm is primarily active in southern California and Arizona. Sites have been announced in Imperial County, Kern County and Mojave (all in California) as well as Yuma County, Arizona. Collectively, these could produce up to 3m mmbtu per annum, using up to 700,000 tons of organic compost from regional farms.

The company is a holding of True North Venture Partners, of Phoenix and Chicago.

TNRE and Whitehall did not respond to requests for comment.

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Project finance, Project news, Raising capital

French e-fuels developer takes investment from private equity pair

A French developer of low-carbon molecules has taken a convertible bond investment for its most advanced e-methanol and SAF projects in France and Spain.

Hy24 and Mirova are co-investing in Elyse Energy’s most advanced e-methanol projects in France and Spain, with industrial commissioning scheduled for 2027 and 2028.

Nomura Greentech acted as exclusive financial advisor to Elyse Energy. Legal advisors included CLP – Cliperton Avocats for Elyse Energy and Gide for Hy24 and Mirova, the companies said in a news release.

Hy24 is the hydrogen-focused wing of French private equity firm Ardian and Mirova is an affiliate of Natixis Investment Managers. The firms have undertaken the equity investment through their respective funds – the Hy24 Clean Infrastructure Fund and the Mirova Energy Transition 5 fund.

The transaction was carried out through convertible bonds, and Mirova and Hy24 are not shareholders of Elyse Energy, a spokesperson said in response to follow-up questions.

Additional terms of the transaction were not disclosed.

The money will allow Elyse Energy to recruit new employees and to continue development through feasibility studies, the industrialisation phase, and beyond.

Elyse’s eM-Rhône project, awarded by the European Innovation Fund, is targeting production of 150,000 mtpy of green e-methanol annually for the maritime sector and industry. The BioTJet project in Pyrénées Atlantiques, France is in advanced stages with annual production set at 75,000 mtpy of e-biokerosene and 3,000 mtpy of naphtha..

The company will deploy some 2.5 GW of installed capacity (1m mtpy) of e-methanol and 200,000 mtpy of SAF. The fuels will go to offtakers in aviation, maritime transport, and industrial processes in sectors such as chemicals.

Hy24 recently closed on a €1.5bn equity private placement in North America’s H2 Green Steel, together with existing investors Altor, GIC and Just Climate.

September 21, 2023

Innovation, Project news

Alaska Airlines reaches SAF deal with Shell Aviation

As part of the agreement, Shell Aviation will supply up to 10 million gallons of neat SAF to Alaska Airlines at their hub in Los Angeles.

Alaska Airlines has reached agreement with Shell Aviation to expand the sustainable aviation fuel (SAF) market beyond a standard fuel supply agreement.

The cross-industry collaboration brings together a world-class fuel supply chain and the fifth-largest domestic carrier to procure and use sustainable fuel, while working together to define and tackle what it will take to advance SAF technology, development, infrastructure and investment, according to a news release.

“Alaska Airlines has set our course to net zero by 2040 and sustainable aviation fuels represent the greatest near-term opportunity to make a step-level change on that journey,” said Diana Birkett Rakow, senior vice president for public affairs and sustainability at Alaska. “That’s why we’ve pioneered SAF technologies for more than a decade. But we can’t scale the market alone. We’re excited to take this next step in the journey with Shell, to leverage their deep knowledge of the energy industry, its infrastructure requirements and supply chain to make lower lifecycle carbon SAF more widely available for the future.”

Details of the agreement include commitments to deepen understanding of the technology, infrastructure, carbon accounting systems and public policy support needed to bring SAF to more markets, in greater quantities and at a more sustainable long-term cost. The companies will put particular focus on enabling supply to the West Coast and alleviating fueling infrastructure challenges in the Pacific Northwest. Shell Aviation will also supply up to 10 million gallons of neat SAF to Alaska Airlines at their hub in Los Angeles.

“We’re excited to expand our strong relationship with Alaska and amplify our efforts to help decarbonize aviation through SAF supply on the West Coast and in the Pacific Northwest,” said Jan Toschka, president of Shell Aviation. “We need support from the entire ecosystem to build a sustainable future for aviation. This deep level of collaboration will help us put the technologies and supply chain in place to advance the industry.”

Both Alaska Airlines and Shell Aviation share an ambition to help scale the SAF market by concurrently addressing cost and volume through multiple strategies to grow availability and commercial viability of SAF.

“With Shell’s world-class fuel supply chain and deep technical knowledge, we’re aiming to transform West Coast fuel supply,” said Ann Ardizzone, vice president of strategic sourcing and supply chain management at Alaska Airlines. “By leveraging the fuel infrastructure expertise of a major fuel producer, we can advance SAF access in more markets, accelerating the market scale of SAF to reach our environmental goals.”

SAF is a safe, certified drop-in fuel that meets the jet fuel standards to reduce carbon emissions by as much as 80% of lifecycle emissions.

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March 23, 2023

Project finance, Project news

Air Products wants more of a premium

Air Products’ equity multiple has compressed over the last 15 months, but CEO Seifi Ghasemi said he is focused on extracting the highest price for the products that his clean hydrogen projects will be providing.

Air Products CEO Seifi Ghasemi defended his company’s project development strategy against concerns over the apparent lack of offtake for large clean hydrogen projects the company is pursuing – concerns that have manifested in Air Products’ equity trading multiple.

Ghasemi was asked on the first quarter earnings call multiple times about prospects for offtake from its NOEM Green Hydrogen project in Saudi Arabia, which has already taken FID, and from its Louisiana Clean Energy Complex, a blue hydrogen project that would send the molecule into its Gulf Coast hydrogen pipeline and into global ammonia markets.

The executive noted that neither project had offtake contracts that were ready to be announced, but emphatically said there is demand for the products, which he expects will increase when European and other regulations take effect.

“We have a product that is going to come onstream that people are going to need,” Ghasemi said, citing low-carbon mandates and carbon border taxes that will go into effect in coming years.

“So what is the price for that? The price for that is not calculated on the basis that this is my capital, this is the return and therefore, we do that. When you have something that people need, you extract the maximum price.”

Another company executive, Samir Serhan, said later in the call that the company already has “three major on-site blue hydrogen contracts for 15-plus years with a premium for the blue product.”

Air Products’ equity multiple has compressed over the last 15 months amid concerns over the capital commitments and the lack of offtake, but Ghasemi said his company should still be among the most valuable in the sector.

“Having taken the risk and losing a lot of our market value because we have taken the risk, we deserve a better return on these projects than running around and trying to panic about the fact that our multiple is, instead of being a 30x EPS, it is 20x EPS,” Ghasemi said. “But the value of the company hasn’t changed.”

He added: “And if it was just a matter of saying, ‘This is my investment and this is a 10% return and this is the price,’ then you don’t need to pay somebody $15m to be CEO of Air Products.”

Asked where Air Products will sell its ammonia amid concerns about sufficient demand in end markets in the near term, Ghasemi noted they were talking to four sectors for green hydrogen: steelmaking, refineries, shipping, and mobility. For blue ammonia, the company is additionally exploring replacing coal in power plants and to decarbonize refining and chemical operations in the Gulf Coast.

“We have always said that it is going to go mainly for decarbonization of the power plants in Japan and in Korea,” he said. “But another significant demand that is being developed and I think there are significant signs that, that is real, is ammonia as a fuel for ships.”

Starting in 2025, ships to Europe will have to pay a tax on carbon emissions when entering European ports, he said.

“We believe this will generate significant amounts of interest in ammonia as a direct fuel for ships,” he added. “And you can check that people have already ordered ships that will use ammonia as a fuel and some of them will actually be on the water in 2026.”

May 1, 2024

M&A

Exclusive: Wisconsin RNG portfolio for sale with large renewables portfolio

A major Canadian utility is auctioning off four Wisconsin RNG assets as part of a larger renewables selldown. The subsidiary at auction has previously indicated that it would take part in Northeastern US hydrogen development.

Algonquin Power & Utilities is selling a package of four renewable natural gas assets, totaling 532 mmbtu, in Wisconsin as part of a larger renewables auction, according to two sources familiar with the matter.

JP Morgan is advising on the process, codenamed Project Power, the sources said.

The process comprises mostly operational onshore wind (2,325 MW) and solar (670 MW), along with an 8 GW development pipeline across 10 power markets, according to a teaser seen by ReSource. The renewable assets are collectively known as Liberty under the Algonquin banner.

The pipeline includes 1,600 mmbtu of RNG. The operational RNG assets reached COD in 2022.

Algonquin did not respond to requests for comment. JP Morgan declined comment.

The Wisconsin assets are apparently the former Sandhill Advanced Biofuels projects, which were acquired by Algonquin in 2022.

When that acquisition was made, it was announced that Liberty had signed on as a “hydrogen ecosystem partner” in the multi-state Northeast Regional Clean Hydrogen Hub. That hub ultimately was not selected by the US department of Energy for hub funding.

January 8, 2024

M&A, Project news, Raising capital

Exclusive: OCI Global exploring ammonia and methanol asset sales

Global ammonia and methanol producer OCI Global is working with an investment bank to explore a sale of ammonia and methanol assets as part of the re-opening of its strategic business review.

OCI Global is evaluating a sale of several ammonia and methanol assets as part of the re-opening of its strategic business review.

The global producer and distributor of methanol and ammonia is working with Morgan Stanley to explore a sale of its ammonia production facility in Beaumont, Texas, as well as the co-located blue ammonia project under development, according to sources familiar with the matter.

The evaluation also includes OCI’s methanol business, one of the sources said.

Representatives of OCI and Morgan Stanley did not respond to requests for comment.

As part of the earlier strategic review announced last year, OCI in December announced the divestiture of its 50% stake in Fertiglobe to ADNOC, and the sale of its Iowa Fertilizer Company to Koch Industries, bringing in $6.2bn in total net proceeds.

However, OCI has received additional inbound inquiries from potential acquirers for the remaining business, leading it to re-open the review, CEO Ahmed El-Hoshy said last month on OCI’s 4Q23 earnings call.

“As such, OCI is exploring further value creative strategic actions across the portfolio, including the previously announced equity participation in its Texas blue clean ammonia project,” he said, adding: “All options are on the table.”

The comments echoed the remarks of Nassef Sawiris, a 40% shareholder of OCI, who recently told the Financial Times that OCI could sell off most of its assets and become a shell for acquisitions.

In the earnings presentation, El-Hoshy took time to lay out the remaining pieces of the business: in particular, OCI’s 350 ktpa ammonia facility in Beaumont; OCI Methanol Group, encompassing 2 million tons of production capacity in the US and a shuttered Dutch methanol plant; and its European ammonia/nitrogen assets.

Texas blue

The Texas blue ammonia project is a 1.1 million-tons-per-year facility that OCI touts as the only greenfield blue ammonia project to reach FID to date. The company has invested $500m in the project as of February 24, out of a total $1bn expected investment, according to a presentation.

“Commercial discussions for long-term product offtake and equity investments in the project are at advanced stages with multiple parties,” El-Hoshy said. “This reflects the very strong commercial interest and increasing appetite from the strategics to pay a price premium to secure long-term low-carbon ammonia.”

El-Hoshy’s comments highlight the fact that, unlike most projects in development, OCI took FID on the Texas blue facility without an offtake agreement in place. The executive did, however, highlight the first-mover cost advantages from breaking ground on the project early and avoiding construction cost inflation.

Additionally, the project was designed to accommodate a second 1.1 mtpa blue ammonia production line, which would be easier to build given existing utilities and infrastructure, El-Hoshy said, allowing for an opportunity to capitalize on additional clean ammonia demand at low development costs.

“Line 2 probably has the biggest advantage, we think, in North America in terms of building a plant where a lot of the existing outside the battery limits items and utilities are already in place,” he said, emphasizing that by moving early on the first phase, they avoided some of the inflationary EPC pressures of recent years.

At the facility OCI will buy clean hydrogen and nitrogen over the fence from Linde, and Linde, in turn, will capture and sequester CO2 via an agreement with ExxonMobil.

March 13, 2024

exclusive

M&A, Project news

Caliche CEO talks hydrogen and CO2 storage expansion

Following the acquisition of assets in Texas and California, Caliche Development Partners CEO Dave Marchese discusses opportunities for growth in the hydrogen and C02 storage market.

Caliche Development Partners II has made a pair of acquisitions with the aim of expanding into growing hydrogen and CO2 storage markets in Texas and California, CEO Dave Marchese said in an interview.

The company, which is backed by Orion Infrastructure Capital and GCM Grosvenor, this week announced the purchase of Golden Triangle Storage, in Beaumont, Texas; and the anticipated acquisition of Central Valley Gas Storage, in Northern California – two regions with increasing demand for storage to support variable power loads, natural gas liquefaction, and high penetrations of renewable resources.

Caliche and seller Southern Company did not use financial advisors for the transaction. Caliche used Willkie Farr as its law firm for the financing and the transactions.

Marchese, who has a private equity background and first worked on a successful investment in a fuel cell company in the year 2000, has also racked up years of experience investing in and operating underground storage assets. The Caliche team developed and sold a natural gas liquids and helium storage business – called Coastal Caverns – earlier this year.

“We know how to put things underground and keep them there, including very small molecules, and we have relationships with many of the customers that are using hydrogen today,” he said.

Roughly a third of the industrial CO2 emissions on the Gulf Coast come from the Golden Triangle area, a region in Southeast Texas between the cities of Beaumont, Port Arthur, and Orange. Much of this CO2 comes from the steam methane reformers that are within 15 miles of Caliche’s newly acquired Golden Triangle asset, Marchese said. The site is in similar proximity to pipelines operated by the air companies – Air Products, Air Liquide, and Praxair – that run from Corpus Christi to New Orleans.

“We’re within 15 miles of 90% of the hydrogen that’s flowing in this country today,” he added. “Pipeline systems need a bulk storage piece to balance flows. We can provide storage for an SMR’s natural gas, storage for its hydrogen, and we can take away captured CO2 if the plant is blue.”

The Golden Triangle site, which sits on the Spindletop salt dome, has room and permits for nine caverns total, with two currently in natural gas service. Three of those caverns are permitted for underground gas storage. “We could start a hydrogen well tomorrow if we had a customer for it,” Marchese said.

The Central Valley assets in Northern California are also positioned for expansion, under the belief that the California market will need natural gas storage for some time to support the integration of renewables onto the grid, he said. Additionally, the assets have all of the safety, monitoring and verification tools for sequestration-type operations, he added, making it a good location to start exploring CO2 sequestration in California. “We think it’s an expansion opportunity,” he said.

“Being an operator in the natural gas market allows us to enter those other markets with a large initial capital investments already covered by cash flowing business, so it allows us to explore incrementally the hydrogen and CO2 businesses rather than having to be a new entrant and invest in all the things you need to stand up an operation.”

Caliche spent $186m to acquire the two assets, following a $268m commitment from Orion and GCM. The balance of the financial commitment will support expansion.

“We’re capitalized such that we have the money to permit, build, and operate wells for potential CO2 sequestration customers,” he said. “The relationship with these stable, large investors also meets the needs of expansion projects: if somebody wanted not only a hydrogen well but compressors as well, we have access to additional capital for underwritten projects to put those into service.”

December 2, 2022