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Calumet buys second reactor for SAF expansion

The specialty refiner has purchased a second reactor to expand production of sustainable aviation fuel, citing interest from its sale process involving strategic investors.

Calumet Specialty Products subsidiary Montana Renewables recently acquired the second reactor needed to expand the scope of its sustainable aviation fuel production, according to a company update.

While the company has not made a final installation decision, great interest from the existing Lazard process warranted the opportunistic reactor purchase, the release says.

“Our strategy to retain a downsized crude oil refinery while carving out Montana Renewables meant a higher degree of difficulty compared to simply converting a closed refinery,” said Bruce Fleming, EVP Montana Renewables and Corporate Development. “Delivering an aggressive timeline, navigating two winter construction seasons, minimizing 2022 downtime for turnaround and carveout, building safely on an operating site, and moving quickly through commissioning all demonstrate the high capabilities of the Great Falls workforce.  While not without setbacks, we are proud of the journey. Going forward, the full economic contribution of the specialty asphalt refinery will follow normal seasonal patterns, and Montana Renewables will reach steady state earnings after the first quarter commissioning sequence is complete.”

Montana Renewables commissioned its modified hydrocracker in renewable diesel service on November 5, then retrofitted additional winterization capability during the month of November. It generated a full month of on-spec Renewable Diesel production in December and commenced rail shipments late in the month after establishing product inventories. Catalyst performance has been consistent and met the expected performance envelope provided by Haldor Topsoe. The current 6,000 bpd capacity will increase to 12,000 bpd with the sequential commissioning of renewable hydrogen, SAF, and feedstock pre-treater which are expected online in that order in 1Q2023.

Preliminary engineering and procurement is beginning for the expected 2024 expansion including the option to maximize SAF yield to 85%, according to the update.

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CVR Partners closes 45Q transaction for carbon capture at Kansas fertilizer facility

CVR Partners and CCS firm CapturePoint have closed a tax equity transaction with outside investors, opening up millions in quarterly payments through 2030.

CVR Partners, LP, a manufacturer of ammonia and urea ammonium nitrate solution fertilizer products, and CapturePoint, a Texas company focused on capturing carbon oxides from industrial processes, have closed a tax equity transaction pertaining to carbon capture and sequestration at CVR subsidiary Coffeyville Resources Nitrogen Fertilizers (CRNF).

The parties have entered into a series of agreements with certain unaffiliated third-party investors and certain of their respective affiliates intended to qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits, accordign to a news release.

In connection with the 45Q transaction, CRNF and CapturePoint each received an initial payment, net of expenses, of approximately $18m and are expected to also receive installment payments, payable quarterly, until March 31, 2030, totaling up to approximately $22m each for the seven-year period and potentially certain contingent payments over this same period if certain carbon oxide capture and sequestration milestones are met, totaling up to approximately $38m each, subject to certain customary and other specified terms.

“As a leader in the production of low carbon nitrogen fertilizer, CVR Partners is proud to participate in the generation of carbon capture and sequestration credits as a result of our voluntary nitrous oxide abatement and carbon sequestration projects in Coffeyville, Kansas,” said Mark Pytosh, chief executive officer of CVR Partners’ general partner. “This facility is uniquely qualified to produce hydrogen and ammonia that is certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints. These efforts support our core Values of Environment and Continuous Improvement, and our goal of continuing to produce nitrogen fertilizers that feed the world’s growing population in an environmentally responsible way.”

“CapturePoint is pleased to partner with CRNF and third-party investors to realize the benefits of carbon capture and sequestration credits for services that CapturePoint has long provided as a leader in the carbon capture and sequestration field,” said Tracy Evans, chief executive officer of CapturePoint. “CapturePoint looks forward to even more exciting announcements in the near future as it continues to expand its carbon capture and sequestration services.”

In the event that certain carbon oxide capture or sequestration requirements are not met, CRNF and CapturePoint may be required to pay certain specified damages payments to the Investors, up to the amount of payments received by CRNF and CapturePoint in connection with the 45Q Transaction, less the amount ofSection 45Q Credits received by the Investors.

CapturePoint will serve as manager of the Tax Equity JV, according to a securities filing.

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Pembina and Marubeni developing Canada-to-Japan blue ammonia project

The project will be structured as an infrastructure-style, fee-based business with investment grade counterparties and is seen as an anchor to a proposed 2,000-acre clean fuels industrial complex in Alberta.

Pembina Pipeline Corporation and Marubeni Corporation have signed an MOU to develop a blue ammonia supply chain from Western Canada to Japan and other Asian markets, according to a news release.

The facility will be on Pembina-owned lands adjacent to its Redwater Complex in the Alberta Industrial Heartland near Fort Saskatchewan, Alberta.

Initial feasibility studies have been completed and the facility has an anticipated design capacity of up to 185 kilotonnes per year of hydrogen production, which will be converted into approximately one million tonnes per year of ammonia.

The facility will include carbon capture with the potential for integrated transportation and sequestration on the proposed Alberta Carbon Grid being developed by Pembina and TC Energy.

The ammonia would be transported via rail to Canada’s WestCoast and shipped to Japan and other Asian markets.

Under the MOA, Pembina and Marubeni will focus on the preliminary Front End Engineering Design (pre-FEED), engagement with various stakeholders, including governments in Canada and Japan, and commercial activities.

The project is expected to be structured as an infrastructure-style, fee-based business with investment grade counter parties. Pre-FEED work is currently expected to be completed by early 2024.

The project could potentially serve as an anchor development to advance Pembina’s ongoing efforts to establish a new growth platform known as the Pembina Low Carbon Complex (PLCC) for energy transition technologies, sustainable fuels, and chemicals like hydrogen, ammonia and methanol.

“With over 2,000 contiguous acres of undeveloped land located in the Alberta Industrial Heartland, Pembina’s vision is to develop an industrial complex for low-carbon energy infrastructure to better enable Pembina and third parties to develop projects, while reducing costs, emissions, and risk,” the release states.

Projects within the PLCC would gain access to land, low-carbon hydrogen, clean power, natural gas and industrial gases, water, CCUS, and the construction and operation of rail assets. Within the PLCC, Pembina would lease land to third parties and provide infrastructure, logistics, and shared services to tenants.

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Nel needs more orders to build Michigan electrolyzer plant

Nel Hydrogen executives said today that they will need to win more large-scale orders in order to take a positive final investment decision on a proposed Michigan electrolyzer factory.

Norway-based Nel Hydrogen will need to win more large-scale orders in order to build its proposed electrolyzer gigafactory in Michigan, executives said today.

The company announced last month that it has selected Plymouth Charter Township near Detroit as the location for the plant, with an anticipated annual capacity of 4 GW between PEM and alkaline technology.

Nel has so far secured more than $50 million in financial support for the site. Pending approval of additional state and federal applications, this amount could increase to around $150m.

The company has still not made a final investment decision on the facility, and does not provide a timeline for when it expects to do so.

“For us to do something in Michigan we first need to utilize the capacity that we are building now,” CEO Håkon Volldal said. “It doesn’t make sense to build another factory in Michigan and run our current facilities with utilization rates at sixty to seventy percent.”

To execute on the new plant, it would take large-scale orders that they would ideally like to produce and deliver in the US. 

“We will not invest a lot of capital up front and wait for the order,” he said. “We would like to see the orders materialize before we invest, and that’s why we don’t give an exact schedule for when we start the construction.”

Nel’s order intake for 3Q23 came in at 352 NOK ($31m), the lowest of the previous four quarters. Volldal noted that Nel’s win rate for electrolyzer contracts remains around one or two per quarter; however, the 3Q contract wins were smaller compared to previous quarters.

Its total backlog for electrolyzers stands at 2,442bn NOK ($218.5m).

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Carbon credit project developer planning equity raise

A Texas-based carbon credit firm is preparing to sell credits from its first project in the US southeast and planning its first equity raise in 2024.

Sky Harvest Carbon, the Dallas-based carbon credit project developer, is preparing to sell credits from its first project, roughly 30,000 acres of forest in the southeastern US, while looking toward its first equity raise in 2024, CEO and founder Will Clayton said in an interview.

In late 2024 the company will seek to raise between $5m and $10m in topco equity, depending on the outcome of grant applications, Clayton said. The company is represented by Scott Douglass & McConnico in Austin, Texas and does not have a relationship with a financial advisor.

Sky Harvest considers itself a project developer, using existing liquidity to pay landowners on the backend for timber rights, then selling credits based on the volume and age of the trees for $20 to $50 per credit (standardized as 1 mtpy of carbon).

The company will sell some 45,000 credits from its pilot project — comprised of acreage across Virginia, North Carolina, Louisiana and Mississippi – in 2024, Clayton said. The project involves 20 landowners.

Clayton, formerly chief of staff at North Carolina-based renewables and P2X developer Strata Clean Energy, owns a controlling stake in Sky Harvest Carbon. He said he’s self-funded operations to date, in part with private debt. The company is also applying for a multi-million-dollar grant based on working with small and underrepresented landowners.

“There’s a wall of demand… that’s coming against a supply constraint,” Clayton said of companies wanting to buy credits to meet carbon reduction goals.

Sky Harvest would be interested in working with companies wanting to secure supply or credits before price spikes, or investors wanting to acquire the credits as an asset prior to price spikes, Clayton said.

“Anybody who wants to go long on carbon, either as an investment thesis or for the climate benefits to offset operational footprint, it’s a great way to do it by locking supply at a low cost,” he said.

A novel approach to credit definition

Carbon credits on the open market vary widely in verifications standards and price; they can cost anywhere from $1 to $2,000.

“There’s a long process for all the measurements and verifications,” Clayton said.

There are many forestry carbon developers paying landowners for environmental benefits and selling those credits. Where Sky Harvest is unique is its attempt to redefine the carbon credit, Clayton said.

The typical definition of 1 mtpy of CO2 is problematic, as it does not gauge for duration of storage, he said. Carbon emitted into the atmosphere can stay there indefinitely.

“If you’re storing carbon for 10, 20, 30 years, the scales don’t balance,” Clayton said. “That equation breaks and it’s not truly an offset.”

Sky Harvest is quantifying the value of carbon over time by equating volume with duration, Clayton said.

“If you have one ton of carbon dioxide going into the atmosphere forever on one side of the scale, you need multiple tons of carbon dioxide stored on the other side of the scale if it’s for any time period other than forever,” he said, noting that credit providers often cannot guarantee that the protected trees will never be harvested. Sky Harvest inputs more than 1 ton per credit, measured in periods of five years guaranteed storage at a time. “We compensate for the fact that it’s not going to be stored there forever.”

Monitoring protected land is expensive and often difficult to sustain. Carbon markets work much like conservation easements, but those easements often lose effect over time as oversight diminishes (typically because of staffing or funding shortages at the often nonprofit groups charged with monitoring).

“That doesn’t work in any other industry with real physical commodities,” Clayton said. “The way every other industry works is you pay a fund delivery. That’s our measure-as-you-go approach.”

A similar methodology has been put forward by the United Nations and has been adopted in Quebec, Clayton said.

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Siemens Energy NA executive priming for scale in hydrogen

The North American wing of the global technology company is in the earliest stages of engaging EPC providers and economic development officials for its next US electrolyzer manufacturing site, Richard Voorberg, president of Siemens Energy North America, said in an interview.

To say the demand for electrolyzer capacity has grown exponentially in 2022 comes across as an understatement, as customers in industry and energy have increased their orders multiple times over.

Siemens Energy North America’s electrolyzer – which is 18 MW and among the largest in the market – was too large for many customers just a year ago, Richard Voorberg, president of Siemens Energy North America, said in an interview. But following passage of the IRA, the question became how many the customer could get – and how fast.

“How quickly can I get 100 of your electrolyzers?” Voorberg said he hears now, whereas before that same customer might have asked for half an electrolyzer.

The decision to make an electrolyzer as large as 18 MW was part of the company’s strategy to have bigger capacity as the market for hydrogen expanded, Voorberg said.

HIF Global recently said it has tapped Siemens Energy to engineer and design their proprietary “Silyzer 300” electrolyzers to produce approximately 300,000 tons per year of green hydrogen at an eFuels facility in Texas.

Siemens Energy NA is now in the earliest stages of developing a new electrolyzer manufacturing plant in the United States, as previously reported by ReSource.

The US plant will be similar to the plant Siemens Energy is building in Berlin, and won’t be built until after Berlin is completed, Voorberg said.

The company is actively engaging with state economic development committees to scout locations, incentives and labor supplies. It is also in the early stages of engaging engineers, EPC providers and other development partners, Voorberg said.

“We also need to decide in the next few months what we want to do in-house, with our own shops, versus what we want to outsource,” Voorberg said.

North Carolina, Houston, Alabama and upstate New York are all in Siemens Energy’s existing footprint and are as such strong contenders for the new facility, Voorberg said, though nothing is set in stone as far as location. The company would finance the facility within its normal capex expenses within a year.

In electrolyzer manufacturing there is some “test hydrogen” that is produced, so there will be a need to find some small offtaker for that, Voorberg said. The company could also use it to supply its own fork-trucks in the future.

Open to acquisitions

Diving into an acquisition of another electrolyzer manufacturer probably would not make sense for Siemens Energy, Voorberg said. But the company is open to M&A.

He cited the acquisition of Airfoil Components in Florida as the type of deal that the company could move on again. In that case, the target company had expertise in casting that was easier to acquire than build from scratch.

“Does that make more sense that we buy it, that we outsource it, or should we be doing something like that ourselves?” Voorberg said are questions he often asks.

“When it comes to less complicated things, like a commodity market, that’s not something we play well in or need to play well in,” Voorberg said. “When it comes to a specialty design-type product, that’s where we at Siemens Energy shine.”

Right now, the Siemens Energy parent company has a bid out to acquire the third of Siemens Gamesa, the Spanish-listed wind engineering company, that it does not own, Voorberg noted.

Start-up opportunity

Siemens Energy, through its in-house venture capital group and partnerships with US universities, is interested in helping technology startups scale, Voorberg said.

“We can play in between them and the customers and do the introductions and potentially even partner in with some of our technology,” he said.

The company keeps close relationships with incubators at Georgia Tech and the University of Central Florida, among others, Voorberg said.

Equity investments will be made through the VC group, Voorberg said, noting that effort as one that is strategic in growing the energy transition, rather than financial.

Additional non-equity partnerships, similar to the fellowship with the Bill Gates-founded Breakthrough Energy, are on the table as well.

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Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere.

The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.
The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

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