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CF Industries execs tout Waggaman ammonia plant acquisition

CF Industries executives touted their agreement to buy the Waggaman ammonia facility and predicted that many of the announced Gulf Coast ammonia projects will not get built.

Amid expectations for continued cost inflation to build the raft of announced Gulf Coast ammonia projects over the next few years, the per-ton cost of CF Industries’ acquisition of the Waggaman ammonia production facility is going to look “really attractive,” CEO Tony Will said today on an investor call.

CF in March agreed to pay $1.675bn to Incitec Pivot Limited to purchase an ammonia production complex located in Waggaman, Louisiana, with nameplate capacity of 880,000 tons of ammonia annually.

Asked about potential cost inflation due to a burst in planning and construction activity for ammonia plants, Will noted that the expects every aspect of the projects to experience cost pressures in the coming years, impacting both the time it takes for the projects to get built and the overall cost picture. (ReSource is tracking eight announced green or blue ammonia projects on the Gulf Coast.)

“The raw materials, the metals, the fabrication, the transportation, the labor — you’re seeing inflation in every single aspect,” Will said. “Remember, none of these projects that have been announced are really under way at this point, so minimum of 2027, maybe 2028 before any of these would potentially start up. It’s one of the reasons that make us so happy about the Waggaman acquisition, because our belief is, by the time some of these projects that are being discussed […] the cost per ton of capacity is going to look really attractive” from Waggaman, he added.

CF is under agreements with JERA Co., Lotte, and Mitsui to advance three separate clean ammonia facilities. It is also advancing green and blue ammonia elements at its Donaldsonville complex, and has entered into an agreement with NextEra to evaluate a joint venture to develop a zero-carbon intensity (green) hydrogen project at CF Industries’ Verdigris Complex in Oklahoma.

Addressing a question about long-term demand dynamics given the prospect of a flood of new ammonia capacity coming online, Will acknowledged uncertainty in the market but expressed confidence in the potential for long-term contracts with counterparties that will use ammonia as a source of clean energy.

“Whether its JERA, Lotte, or a number of others, they’re pretty far advanced in terms of their thinking on some of the pilot projects they’ve run on co-combustion and so forth,” he said. “Our sense is that [demand] is probably going to be developing in larger increments as we get into the ’27 – ’28 timeframe, but by the time we get to 2030 I think there will be a sizeable volume of ammonia consumed in non-traditional applications.”

Will expressed doubts about whether some of the announced Gulf Coast ammonia projects would ever get build. “How real are they, are they actually going to go forward, and are people going to be willing to put the money down?”

Looking back to 2012, Will noted there were around 27 new project announcements, of which only four got built, two of them by CF Industries and the other two by traditional industry participants. “A lot of the speculative plants that were talked about never materialized. And I would expect that same dynamic to happen here,” he said, characterizing some of the announcements as “vaporware.”

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DOE selects 8 carbon capture projects for award negotiations

The DOE has selected eight carbon capture, transport, and storage projects to receive up to $189m in funding for integrated Front-End Engineering Design Studies.

The DOE has selected eight carbon capture, transport, and storage projects to receive up to $189m in funding for integrated Front-End Engineering Design (FEED) Studies.

This funding is part of OCED’s Carbon Capture Demonstration Projects Program, which seeks to address the urgent need to advance carbon management technologies. The goal of the Carbon Capture Demonstration Projects Program is to accelerate the implementation of integrated carbon capture and storage technologies and catalyze significant follow-on investments from the private sector to mitigate carbon emissions sources in industries across America.

OCED selected eight projects to begin award negotiations, which were announced on May 5, 2023.

The following provides a brief overview of the eight FEED Studies selected for award negotiation:

1. Duke Energy Indiana, LLC

Project Name: Edwardsport Flex Fuel Integrated Capture for Indiana’s ENergy Transition (EFFICIENT)

Project Manager: Peter C. Hoeflich, PE

Location: Edwardsport, Indiana

Project Summary: The proposed project includes carbon capture and sequestration at Duke Energy’s integrated gasification combined cycle facility in Edwardsport, Indiana. The proposed design uses a post combustion capture system enabling fuel flexibility from coal-gasified syngas (primary fuel), natural gas and syngas/natural gas blends. This proposed project uses Honeywell UOP CO2 capture technology with an estimated 3.6M tonnes of CO2 captured per year.

2. Entergy Services, LLC (ESL)

Project Name: Lake Charles Power Station Integrated CO2 Capture Project

Project Manager: Janelle Dana

Location: Westlake, Louisiana

Project Summary: The proposed project includes a full-scale integrated CO2 capture facility for Entergy Louisiana LLC’s natural gas combined cycle Lake Charles Power Station (LCPS). The project would use post-combustion CO2 capture technology with Mitsubishi Heavy Industries Ltd KS-21™ solvent capable of capturing a minimum of 95% of the CO2 emissions, equating to nearly 2.5M tonnes of CO2 per year. Entergy Services, LLC has partnered with Talos Energy, Inc. to develop an off-take agreement with a sequestration site approximately 23 miles from LCPS and a pipeline to transport the captured CO2 to the sequestration site for secure storage.

3. Lehigh Hanson, Inc

Project Name: Mitchell Cement Plant Integrated CO2 Capture Project

Project Manager: Gregory Ronczka

Location: Mitchell, Indiana

Project Summary: The proposed project includes integrated CO2 carbon capture, transport, and storage at the Mitchell Cement Plant in Mitchell, Indiana. The proposed project is estimated to capture a minimum of 95% of the CO2 emissions from the cement plant—approximately two million tonnes of CO2 per year. The project design uses Mitsubishi Heavy Industries Americas, Inc. technologies and an infrastructure to securely transport and sequester the CO2 in a geologic formation beneath the plant property.

4. Navajo Transitional Energy Company, LLC (NTEC)

Project Name: Four Corners Power Plant Integrated Carbon Capture and Storage

Project Manager: Harry Tipton

Co- Project Manager: Cindy Crane

Location: Navajo Nation

Project Summary: The proposed project includes an integrated CO2 capture retrofit of post-combustion CO2 capture technology, transport, and storage for the coal fired Four Corners Power Plant (FCPP) located on the Navajo Nation. The proposed project has an estimated capability of capturing a minimum of 95% of the CO2 emissions from the FCPP, representing 10M+ tonnes of CO2 per year. The project uses Mitsubishi Heavy Industries Americas, IncKS-21™ solvent for carbon capture and NTEC has partnered with Enchant Energy, LLC as the CO2 Capture Project Developer, and other institutes for development of the CO2 offtake solution, including pipeline and sequestration site development.

5. Southern States Energy Board

Project Name: Ash Grove Foreman Cement Plant Carbon Capture and Storage

Project Manager: Kenneth Nemeth

Location: Foreman, Arkansas

Project Summary: The proposed project includes integrated CO2 capture and storage associated with cement manufacturing at the Ash Grove Foreman Cement Plant in Foreman, Arkansas. The proposed project includes Air Liquide’s CryocapTM technology as the basis for post-combustion and/or process system CO2 capture, and pipeline and storage field development in the Jurassic Smackover Formation.

6. Taft Carbon Capture, LLC

Project Name: Cypress Carbon Capture Project

Project Manager: Michael Searfass

Location: Hahnville, Louisiana

Project Summary: The proposed project includes a commercial carbon capture facility at the existing Taft cogeneration power plant (i.e., natural gas fired, 3×1 combined cycle, heat, and power cogeneration) facility in Hahnville, Louisiana. The proposed project uses a solvent-based absorption post-combustion carbon capture system that separates and prepares for storage up to three million tonnes of CO2 per year representing a minimum of 90% of the CO2 emissions captured from the power plant.

7. Tampa Electric Company

Project Name: Polk Power Station Integrated CO2 Capture Project

Project Manager: Kris Stryker, Tampa Electric Company

Location: Mulberry, Florida

Project Summary: The proposed project includes retrofitting ION Clean Energy, Inc.’s post-combustion CO2 capture technology with transport and secure geologic sequestration for the natural gas combined cycle power plant at the Polk Power Station in Mulberry, Florida. This technology captures a minimum of 95% of the CO2 emissions which equates to nearly 3.7 million tonnes of CO2 per year that will be stored in secure geologic sequestration that is currently in development.

8. University of Illinois at Urbana-Champaign

Project Name: Integrated Capture, Transport, and Geological Storage of CO2 Emissions from City Water, Light and Power

Project Manager: Dr. Kevin O’Brien

Location: Springfield, Illinois

Project Summary: The proposed project includes an end-to-end carbon dioxide capture, transport, and storage solution for the Dallman 4, a pulverized coal power plant at City Water, Light and Power in Springfield, Illinois. The project is estimated to capture two million tonnes of CO2 per year and transport it to a geologic storage site in the Illinois Storage Corridor. The proposed capture system uses a Linde-BASF solvent-based system.

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RNG, SAF and biomass projects backed by Canadian government

Public funding to three companies is meant to aid development of six separate RNG, SAF and woody biomass-to-electricity projects across the country, including two in the Niagara region.

The federal government of Canada will invest CAD $15m to support six clean fuels projects across the country, including CAD $10m for two projects in the Niagara region, according to a news release

The federal investments include:

  • $4.6 million to StormFisher Hydrogen to support a front-end engineering (FEED) study for a renewable natural gas (RNG) production facility at BMI’s Multimodal Hub in Thorold, Ontario.
    • Upon the completion of the FEED study in the summer of 2025 and construction of the planned CAD $200m production facility in 2027, StormFisher Hydrogen will combine renewable electricity from Ontario’s clean grid along with biogenic CO2 emissions from local industry to produce 1.25m gigajoules of RNG.
    • The project will support the decarbonization of the Canadian natural gas system and anchor a hydrogen hub in Thorold that will help attract other clean energy and technology businesses to the Niagara region.
  • More than CAD $5m to CHAR Technologies to support FEED studies that will enable CHAR to replicate their first-of-its-kind woody-biomass-to-renewable-energy facility in Thorold, Ontario in other parts of Canada.
    • Supported by an existing investment of $5 million from NRCan, CHAR is finalizing its construction of its clean fuels production facility at BMI’s Multimodal Hub in Thorold, which will convert woody biomass to renewable energy like RNG and biocarbon. The new NRCan funding announced today will enable CHAR Technologies to replicate this work at four new facilities in Kirkland Lake, Ontario; Drayton Valley, Alberta; and Saint Félicien and La Salle, Quebec and create a distributed network of low-carbon fuels production facilities across three provinces in Canada.
    • Taken together, the Thorold, Ontario, project — which is expected to reach commercial production this year — and the four other clean fuel production facilities in Kirkland Lake, Ontario, Quebec; and Alberta – which are expected to come online in the following two years — will maximize the value of underutilized waste wood resources and help decarbonize Canada’s steel and mining industries, and Canadian gas utilities.
  • CAD $5m to support Azure Sustainable Fuels Corp. in delivering a FEED study to support the construction and operation of a sustainable aviation fuels (SAF) production facility in Port Colborne, Ontario.
    • If the project reaches a positive Final Investment Decision (FID), following the completion of the FEED study, it is expected that the Azure’s SAF project would support approximately 1,500 construction jobs and 150 full time jobs during operations in Port Colborne, Ontario.
    • The FEED study is expected to be completed in by the end of 2024 and the construction of the planned facility would be commenced immediately following a positive FID.  The proposed project will be located on the north end of Port Colborne, Ontario, along the Welland Canal — a strategic location that will provide immediate access to local and global markets.
    • The planned processing facility in Port Colborne will leverage Canada’s agricultural sector to produce SAF that will meet the growing demand to help reduce emissions from the aviation sector.  Azure’s proposed project in Port Colbourne is one of three projects that Azure is progressing in Canada, with support from the federal government.

“We are leveraging Canada’s innovative clean tech companies and abundant range of feedstocks — including forest byproducts, agricultural crops and our low-emitting electricity grid — to grow Canada’s domestic production of clean fuels across the economy,” the release states.

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Superior Plus establishes low carbon fuels distribution platform with CAD 1.05bn Certarus acquisition

Superior Plus Corp. and Certarus Ltd. have entered into a definitive agreement for Superior to acquire Certarus, a North American distributor of over-the-road low carbon fuels, including CNG, RNG and hydrogen.

Superior Plus Corp. and Certarus Ltd. have entered into a definitive agreement for Superior to acquire Certarus, a North American low carbon energy solutions provider for a total acquisition value of CAD 1.05bn, representing 8.5x 2022E EBITDA, according to a news release.

Under the terms of the acquisition, Superior will acquire all the outstanding common shares of Certarus, representing an equity value of CAD 853m and assume Certarus’ outstanding senior bank credit and leases with a total value of CAD 196m. The Certarus shareholders will receive CAD 353m in cash and CAD 500m of Superior common shares priced at $10.25 per share, representing approximately 17% pro forma ownership. The transaction has been unanimously approved by the Board of Directors of both Superior and Certarus and is expected to close in the first quarter of 2023, subject to customary closing conditions.

Certarus is a rapidly growing North American distributor of over-the-road low carbon fuels, including CNG, RNG and hydrogen. Through the use of mobile storage units (MSUs), Certarus delivers low cost and low carbon intensity energy alternatives to its customers. Certarus’ MSUs are interchangeable between CNG, RNG and hydrogen giving Certarus flexibility to service its customers across North America as they transition away from diesel and other distillates. Certarus provides a virtual pipeline to its customers that do not have infrastructure in place or are in need of supplemental infrastructure. Revenue is generated from fees for service to provide its lower cost and lower CI fuels, directly passing on changes in the commodity cost of its fuels to customers.

Certarus has 18 hubs throughout Canada and the U.S. and expects to have 640 MSUs by year end, making it the largest on-road low carbon fuels distributor in North America with approximately 85% of its revenue generated in the U.S. From 2020 to 2022E, Certarus has grown the number of MSUs by 37%, the volume of low carbon fuels delivered by approximately 76% to 57,000 MMBtu/d and is expected to maintain substantial growth as the demand for its products continues to increase. Over the same period, Certarus has more than doubled its Adjusted EBITDA2, with expected 2022 Adjusted EBITDA of $124 million, driven by continued volume and efficiency improvements.

Certarus’ rapid growth is the result of increasing customer demands to transition from higher cost and higher carbon intensity fuels such as diesel and other distillates to lower cost and lower carbon energy alternatives. The acquisition of Certarus accelerates Superior’s energy transition path with a business that is both rapidly growing and accretive to Superior’s financial results.

“The acquisition of Certarus is a highly strategic and transformative transaction for Superior as it represents an exciting opportunity for significant organic growth and provides our existing and new customers with the ability to meet their ESG goals through our low carbon energy distribution platform,” said Luc Desjardins, Superior’s president and CEO. “With our execution on the Superior Way Forward strategic initiatives in the past 24 months, we are ahead of our timing to achieve CAD 700m to CAD 750m in EBITDA from operations as we now expect to reach the lower end of the target by 2024.”

Curtis Philippon, Certarus’ President and CEO stated, “we are excited to be joining the Superior team. Certarus will benefit from Superior’s scale, portable fuel distribution expertise, and a shared commitment to safety. The joining of our businesses creates a strong platform upon which we can continue to grow and provide decarbonization solutions, including RNG and hydrogen.”

“We are thrilled to partner with Curtis and the team at Certarus,” said Angelo Rufino, Brookfield’s nominee on Superior’s board of directors and a member of Superior’s ad hoc Committee to evaluate Certarus. “Certarus’ low carbon and alternative fuel distribution platform provides an exciting new organic avenue of growth for Superior Plus and will further assist our core customers as they transition to a lower carbon future.”

Brookfield Asset Management made a USD 260m equity investment in Superior in 2020.

Superior intends to finance the Acquisition and related transaction expenses using a combination of approximately 48.8 million Superior common shares issued directly to Certarus shareholders valued at CAD 500m and incremental drawings from its expanded senior credit facilities.

The expanded senior credit facilities will increase to CAD 1.3bn from the current size of CAD 750m via the addition of a new CAD 550m senior secured credit facility with a three-year term. The New Credit Facility is fully committed with the CAD 550m provided by a group of lenders including Canadian Imperial Bank of Commerce, The Bank of Nova Scotia, The Toronto-Dominion Bank and National Bank of Canada.

CIBC Capital Markets is acting as exclusive financial advisor to Superior. Torys LLP is acting as Canadian legal counsel to Superior.

J.P. Morgan and National Bank Financial Inc. are acting as financial advisors to Certarus. TD Securities Inc. is acting as strategic advisor to Certarus. Burnet, Duckworth & Palmer LLP is acting as legal counsel to Certarus.

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Exclusive: Glenfarne exploring hydrogen projects on existing asset base

Glenfarne Energy Transition is advancing its flagship liquefied natural gas project, Texas LNG, and evaluating hydrogen projects on or near its existing asset base on the Gulf Coast.

The Biden administration’s pause on permits for new US liquefied natural gas facilities hasn’t hurt all unbuilt projects.

Glenfarne Energy Transition, a subsidiary of Glenfarne Group, is moving ahead with its fully permitted lower-carbon flagship LNG export facility, Texas LNG, as the project is now set up to be the only such US project to reach FID this year.

Texas LNG, a 4 million MTPA facility proposed for Brownsville, Texas, will be the lowest carbon emitting LNG facility approved in the US, largely due to its use of electric motors in refrigerated compression. 

As designed, the plant would emit .15 metric tons of CO2e per ton of LNG produced, placing it slightly lower than the much larger Freeport LNG facility, which also has electric motors and emits around .17 metric tons of CO2 per ton of LNG.

The carbon intensity measurement counts emissions at the Texas LNG plant only, and not related emissions from the electric grid, which is why Glenfarne is seeking to source power for the project from wind and solar generation in south Texas, Adam Prestidge, senior vice president at Glenfarne, said in an interview.

In fact, the lower carbon aspects of Texas LNG helps with every element of the project, Prestidge said, including conversations with European offtakers and potential debt investors.

“Having a focus on sustainability is table stakes for every conversation,” he added. “It’s the finance side, it’s the offtake side, it’s our conversations with regulatory agencies.”

LNG pause

Glenfarne is seeking to raise up to $5bn of equity and debt for the project, according to news reports, a process that could benefit from the Biden administration’s pause on issuing permits for LNG projects that export to countries without free-trade agreements with the US.

“Our confidence and our timetable for that has probably been accelerated and cemented by the fact we are fully permitted, despite the Biden LNG pause impacting the broader market,” Prestidge said.

“The market has pretty quickly recognized that if you want to invest in LNG or buy LNG from a project that’s going to FID in 2024, you really don’t have very many fully permitted options right now.”

Glenfarne’s other US LNG project, called Magnolia LNG, has not yet received the required federal approvals and is therefore on pause along with a handful of other projects.

For Magnolia, Glenfarne is proposing to use a technology for which it owns the patent: optimized single mixed refrigerant, or OSMR, which uses ammonia instead of propane for cooling, resulting in less feed gas needed to run the facility and thus about 30% lower emissions than the average gas-powered LNG facility, Prestidge said.

Hydrogen projects

Glenfarne Energy Transition last year announced the formation of its hydrogen initiative, saying that projects in Chile, Texas, and Louisiana would eventually produce 1,500 kilotons of ammonia. 

“We’ve got existing infrastructure in the US Gulf Coast, and in Chile. A lot of the infrastructure required to produce LNG is similar or can be easily adapted to the infrastructure needed to produce ammonia,” Prestidge said. “And so, we’ve looked at locating hydrogen and ammonia production at sites in or near the ports of Brownsville and Lake Charles,” where Texas LNG and Magnolia LNG are located, respectively.

“The familiarity with the sites and the infrastructure and the local elements, make those pretty good fits for us,” he added.

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exclusive

Pharma and fuels tech provider could be ready for public listing

International biotechnology firm Insilico Medicine is applying the algorithms that produce novel drugs to synthesizing more sustainable petrochemical fuels and materials.

Insilico Medicine, a global biotechnology firm serving the pharmaceutical and carbon-based energy industries, could be ready for a public listing in the next phase of its corporate evolution.

Insilico, founded in Baltimore and now based in Hong Kong, has raised about $400m in private capital to date and is in the position of a company that would be exploring a public listing in the US and Hong Kong, CEO Alex Zhavoronkov said in an interview. He declined to say if he has hired a financial advisor to run such a process but said a similar company in his position would have.

The generative AI platform that the company uses to produce novel drugs can be applied to produce more sustainable carbon-based fuels, Zhavoronkov said. The objective is to maximize btu and minimize CO2, making the fuels burn longer and cleaner.

Saudi Arabia’s state oil company Aramco is a user of the technology and participated in Insilico’s $95m Series D (oversubscribed and split between two sub-rounds) last year through its investment arm Prosperity7.

Petrochemistry is going to be needed well into the future, Zhavoronkov said. In addition to renewable energy and other ESG efforts, the efficiency of petrochemicals should be a top priority.

“If you burn certain petrochemicals in certain combinations, you can achieve a reasonably clean burn and an energy efficient burn,” he said. For specific tasks like space travel or Formula 1 racing, combined fuels produce the necessary torque, and generative chemistry can achieve those objectives in a more sustainable way. “I think that we can make the world significantly cleaner just by modifying petrochemical products.”

The technology can also be used to make organic matter in petrochemical products degrade more quickly, which is useful in the case of plastics, Zhavoronkov said.

The company’s AI is primarily based in Montreal and in the drug discovery business in China, but fuel research takes place in Abu Dhabi. Zhavoronkov said he has hired a lot of “AI refugees” from Russia and Ukraine to work at the latter location. The company has 40 employees in the UAE and will likely scale to 70.

Insilico is capitalized for the next two years or so, he said. That doesn’t account for revenue, which closed at just under $30m in 2022. The petrochemical and materials business is under the AI research arm of the business, which is covered by funds raised to date.

“Our board would probably not allow me to reinvent myself as an energy play,” Zhavoronkov said. But the board does not object to applying resources to petrochemical products.

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exclusive

EverWind in capital raise for Nova Scotia wind-to-hydrogen complex

EverWind Fuels is soliciting investor bids for a $1bn initial phase of its Point Tupper renewables and hydrogen/ammonia production facility in Atlantic Canada.

EverWind Fuels, the Canada-based renewable fuels developer, is preparing to launch a process to raise an estimated $800m in debt for its Point Tupper ammonia production and export facility near Halifax, according to two sources familiar with the matter.

Citi and CIBC are mandated on the raise.

The company is seeking capital from a variety of investors, one of the sources said. The raise will likely conclude around the middle of the year with Citi stepping up for part of the debt quantum.

EverWind is also in talks with Canadian Infrastructure Bank, one of the sources said.

EverWind, Citi, CIBC and CIB did not respond to requests for comment.

Nova Scotia’s Minister of Environment and Climate Change recently approved the Point Tupper Green Hydrogen/Ammonia Project – Phase 1. Construction should begin this year on phase 1 of the project, consisting of a 300 MW electrolysis plant along with a 600 tonnes-per-day ammonia production facility. The project also involves construction of a liquid ammonia pipeline to a jetty for international shipping and a 230 kW substation that will bring in electricity.

Government support for the project is leading to offtake agreements needed to build out a hydrogen supply chain at scale, a third source said. The project is nearing a $200m offtake agreement for green hydrogen with a large global manufacturer, this source added.

The German groups E.ON and Uniper said in August that they aim to buy up to 500,000 tonnes per year of ammonia each from EverWind, starting in 2025, when the project is set to begin production.

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