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Energy Transfer evaluating new blue ammonia, CO2 ventures

The US midstream giant is evaluating using its existing asset base to facilitate blue ammonia exports, while also mulling CO2 pipeline projects in Texas and Louisiana.

US midstream company Energy Transfer is considering using its existing asset base in Lousiana and Texas to facilitate exports of blue ammonia.

The company, which generated $78m of revenues in 2023, would potentially provide infrastructure services to blue ammonia producers in the region, and also use its deepwater marine capabilities to existing property for exports.

On the blue ammonia front, we are working with several companies to evaluate the feasibility of ammonia projects,” Co-CEO Tom Long said in remarks yesterday. “That would include the opportunity to supply and transport natural gas to the ammonia facility and to transport CO2 to third-party sequestration sites.”

Long added, “We’re also looking at opportunities to provide other infrastructure services, including transport and sequestration, ammonia storage, and deep water marine loading on property near our Lake Charles and Nederland facilities,” a reference to assets in Louisiana and Texas, respectively.

The company is also working on carbon capture and sequestration projects that would fit onto its existing processing plants in in North Louisiana, South Texas, and West Texas. “And we are evaluating other CO2 pipeline projects that would connect CO2 emitters to CO2 sequestration sites,” Long said.

Energy Transfer, along with CapturePoint, is a proponent of the the Central Louisiana Regional Carbon Storage Hub — or CENLA Hub — which involves the capture of CO2 emissions from natural gas processing facilities owned by affiliates of Energy Transfer in north and central Louisiana, as well as from other industrial sources in the area, for transport by pipeline to deep underground sequestration.

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Mitsui investment arm appoints US-based CEO

Mitsui O.S.K. Lines, one of the largest shipping companies in the world, has appointed a California-based CEO of its investment arm to oversee a $100m budget for investment in climate tech. The booming containership market in recent years has provided Mitsui O.S.K. Lines with a strong financial base that enables it to make aggressive new investments.

MOL Switch, a recently established investment arm of Mitsui O.S.K. Lines, has appointed Tomoaki Ichida as CEO.

Ichida has held the position of executive officer at Mitsui O.S.K. Lines since April of last year, and was promoted to managing executive officer in conjunction with his appointment as CEO of the investment arm, according to a LinkedIn post.

MOL Switch was established earlier this year to invest in startups developing decarbonizing technologies in the energy sector. MOL Switch will invest $100m in total over the next three years.

Ichida is based in Palo Alto, California, according to LinkedIn.

MOL Switch aims to access innovation, build new networks, explore new business opportunities, and expand human capital by investing in startups developing technologies and business models that help decarbonize our group companies and society, according to a news release. MOL Switch will invest in technologies related to next-generation clean energy, carbon removal, and battery storage.

The booming containership market in recent years has provided Mitsui O.S.K. Lines with a strong financial base that enables it to make aggressive new investments, according to a presentation.

MOL Clean Energy, US, a subsidiary of Mitsui O.S.K. Lines, earlier this year became a JV shareholder in Ascension Clean Energy, a proposed world-scale, clean hydrogen-ammonia production and export facility in Ascension Parish.

The MOL Switch venture capital strategy mirrors its Japanese counterpart, JERA, which earlier this year launched JERA Ventures to invest $300m in start-up companies that have leading-edge technologies or business concepts and in venture capital funds that have close connections to such companies.

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Hystar to establish North American electrolyzer production

The Norway-based electrolyzer maker will begin hiring for North American headquarters, with plans to establish a multi-GW facility by 2027.

Norwegian electrolyzer maker Hystar is planning to expand into North America, establishing a headquarters next year and a multi-GW factory by 2027, according to a news release.

As part of its expansion, Hystar will soon initiate the hiring process for its new North American headquarters. Additionally, the company is in discussions with key stakeholders in both the United States and Canada to establish its first GW factory on the continent, where Hystar expects its commercial operations may exceed its European plans within the decade. The company has not ruled out the possibility of investing in further GW factories before 2030.

Hystar said in the same release it will deliver a fully automated 4 GW electrolyser factory in Høvik, Norway (just west of Oslo) by 2025, with construction commencing in early 2024.

The company earlier this year raised $26m in a Series B funding round co-led by AP Ventures and Mitsubishi Corporation. Additional investors in the round included Finindus, Nippon Steel Trading, Hillhouse Investment and Trustbridge Partners, alongside existing investors SINTEF Ventures and Firda.

Commenting on their expansion plans, Fredrik Mowill, CEO of Hystar, said: “Our Høvik GW factory demonstrates our commitment to rapidly expanding our European operations and meeting the strong demand for our technology across Europe. As we continue to scale up our operations, we are now looking at opportunities beyond Europe – the North American market has created a highly favourable environment for companies like ours to thrive in. We are looking forward to identifying the ideal North American location for Hystar.

Hystar has already commenced production of its electrolyzer stacks for its upcoming PEM electrolyzer deliveries using its existing facilities, which have a production capacity of 50 MW annually.  As such, Hystar’s ramp-up to a GW factory marks a significant expansion to meet the surging demand for its breakthrough technology. The supplier for the Høvik GW automated production line will be selected later this year, and the factory’s production line will be fully operational by 2026.

Upcoming deliveries from Hystar include a 1 MW electrolyzer in Q4 2023 for Norwegian companies Equinor, Yara Clean Ammonia, and Gassco, for the HyPilot field project in Kårstø, Norway. This will be followed by a 5 MW electrolyzer for Poland’s largest private energy company, Polenergia, in Q3 2024 for their H2HubNS project in Nowa Sarzyna, Poland.

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BayoTech hires VP of development

The new hire, Jack Hedge, will be responsible for leading the development of hydrogen projects in North America.

New Mexico-based BayoTech Hydrogen has hired Jack Hedge as its new vice president of hydrogen hub development, according to a press release.

Hedge will be responsible for leading the development of hydrogen projects in North America. He will lead a team that is developing relationships with host property managers, community stakeholders, regulators, and local government officials who are interested in decarbonization.

“BayoTech is on the verge of making hydrogen production local and hub development is how we achieve it,” said BayoTech President & CEO, Mo Vargas. “Jack has years of experience in developing and executing major projects for some of the most recognized ports in the nation. That experience paired with his dedication to clean energy projects is exactly why we thought he was the right person to lead this phase of growth. We are delighted to have Jack’s leadership, passion for making the world better and experience both as a developer and as a project host to support customers decarbonization goals and drive projects to completion.”

“I am excited to begin this next chapter and blend all my previous experience into something truly meaningful and impactful. Working with the team at BayoTech we will lead the way to truly “smart, sustainable and equitable” supply chains,” Hedge said in the release.

Prior to joining BayoTech, Jack served as president of Utah Inland Port Authority, where he was responsible for developing and building one of the nation’s leading sustainable intermodal logistics hubs. Jack has also worked as the director of cargo and industrial real estate for the Port of Los Angeles where he lead the development, leasing, and asset management functions of the largest container port complex in North America.

BayoTech last year agreed to a memorandum of understanding with Carbon Clean under which the two parties will work togeterh on a demonstration facility to evaluate, design, and operate a carbon capture plant at a BayoTech site in North America which is expected to be operational by the end of 2022.

Investors in BayoTech include Newlight Partners, Opal Fuels, Nutrien, The Yield Lab, Cottonwood Technology Fund, Sun Mountain Capital and Caterpillar Venture Capital Inc.

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Developer Profile: Green hydrogen developer finds strength in numbers

Clean Energy Holdings is assembling a coalition of specialized companies as it seeks to break into the novel green hydrogen market.

Nicholas Bair draws a direct line from his childhood on an Oregon dairy farm to the coalition of specialized companies that, as the CEO of Clean Energy Holdings, he is now assembling in pursuit of key-player status in the green hydrogen industry.

“We created our own milk from our own hay,” he says, of his family’s organic dairy farm in Klamath Falls, near the California border. He adds, using an expression he often repeats: “Everything was inside the battery limits.”

This phrase – “inside the battery limits” – represents what Bair, who is forty-one and a chemist by trade, is trying to achieve with The Alliance: a broad, self-contained battery of partners with specialized competencies working in coordination on the challenges of developing and operating groundbreaking green hydrogen projects.

“We’re doing everything from soup to nuts,” he says.

CEH and The Alliance are planning to build roughly $1bn worth of projects per year over the next ten years, Bair says. As a launching point, the parties are advancing a green hydrogen facility – called Clear Fork – near Sylvester, Texas that would churn out 30,000 kg per day in phase 1 starting in 4Q24. The hydrogen would be produced using electrolyzers powered by a 325 MW solar farm, while ancillary facilities at the site would be powered by a gas turbine capable of blending up to 70% hydrogen.

As members of The Alliance, Equix Inc. is acting as the EPC for the solar and gas turbine portion of the project, while Chart Industries is providing tankers, trailers, and liquefaction to transport hydrogen from the site in northwest Texas. Meanwhile, Hartford Steam Boiler – an original contributor to standards written by the American Society of Mechanical Engineers – will provide quality assurance and control; Coast 2 Coast Logistics is responsible for trucking; and The Eastman Group provides permitting and facilities management.

‘First-of-kind’

Although a renewable project, the green hydrogen concept is similar to most refinery EPC contracts, since many of them are first-of-kind with significant liquidated damages, Bair says. Additionally, the green hydrogen projects are “married to renewables, and you need the cryogenics and the distribution in between.”

Before starting Clean Energy Holdings, Bair was the founder and CEO of Bair Energy, a program and construction manager for infrastructure and energy projects – a service that Bair Energy is providing as a member of the Alliance. A period of low natural gas prices made Bair Energy’s specialty – geothermal power – less competitive, and Bair, seeking to develop his own projects instead of managing projects for others, sought to branch out into new types of energies.

Bair Energy itself consists of professionals that have been cherry-picked from the industry, Bair says. Candice McGuire, a veteran of Shell and Technip, is Bair’s chairman; chief operations officer John Strawn recently joined from Technip; and wind-industry veteran Peder Hansen has joined as VP and chief engineering manager.

“Our experience on the team is taking first-of-kind, developing it, and getting it to market,” he says. With The Alliance, “We went out and found the best at what they do, put them on lump-sum order, and brought them to the table early to figure out how to make their product talk to the other person’s product, so we can have a guarantee,” he says.

What distinguishes Clean Energy Holdings from other green hydrogen developers is, in fact, the coalition it is building, says Elizabeth Sluder, a partner at Norton Rose Fulbright who is CEH’s legal advisor.

“It’s intended to be one-stop shopping in a vertically integrated structure such that as and when needed for future CEH projects or third party projects that are identified, you have all the various players you need to take it from point A to point B,” she adds.

Because the parties are on standby with a common goal, CEH and its partners can provide lump-sum turnkey services, with some element of bulk pricing potentially factored in, because savings are generated through not having to issue RFPs for partners in future projects.

“The savings in time and money is, I would expect, very valuable,” Sluder says. “And when you apply those principles to long-term strategy and equity investment-type opportunities, the lower capex spend should theoretically benefit the project at large.”

Keeping the pieces moving

Bair runs CEH alongside Co-Founder and President Cornelius Fitzgerald. The two met as children – Fitzgerald was raised on a nearby cattle farm in southern Oregon – and enjoy the uncommon chemistry of childhood friends.

In something of classic pairing, “I’m much more the trumpet, paving the path,” Bair says, while Fitzgerald “usually keeps the pieces moving.”

“Sometimes Cornelius has had the best cup of coffee and takes the lead in meetings. And sometimes I do,” he says. “It’s that ability to rely on each other that set the basis of design in my mind for what a good partner looks like.”

Fitzgerald says they approach the challenge of breaking new ground in green hydrogen with “quiet confidence and humility.” By having a big picture vision as well as “credible and tangible fundamentals for the project” – like land, resource, and water control – the project moved from an idea to a reality, he adds.

“And really we’ve been driving at how to get the best experience and expertise at the table as early as possible,” Fitzgerald says.

Equix, Inc, a civil engineering firm, joined the grouping to build the solar and gas generation portion of the facility, representing the company’s first-ever foray into a hydrogen project, says Tim LeVrier, a vice president of business development at the firm.

“There are many challenges integrating all these types of power sources and energy into creating hydrogen,” Levrier says. “From an electrical engineering standpoint it is extremely challenging to coordinate power switching from one source to another. Another consideration we are having to work through is what to do in regards to producing hydrogen at night. Will there be a battery portion to the project or do we just not produce hydrogen when it is dark? These are all things we are considering and will have to find creative solutions for.”

‘Pathological believer’

CEH recently added Chart Industries to The Alliance, which in addition to furnishing liquefaction, tanks and trailers to move hydrogen, will provide fin fans for cooling and a reverse osmosis system for cleaning water. “We don’t want to give away all our secrets,” Bair says, “but it’s a very efficient process.”

The unique perspective and expertise of partners in The Alliance makes for a fulsome ecosystem around any CEH project, says Jill Evanko, CEO of Chart Industries. With respect to CEH’s projects, Evanko says they are “very targeted, which, with focus, will continue to help evolve the hydrogen economy.”

“Chart’s hydrogen liquefaction process as well as associated hydrogen equipment including storage tanks and trailers” – which the company has been manufacturing for over 57 years – “will be sole-source provided into the project. This will allow for efficient engineering and manufacturing to the CEH Clear Fork project schedule,” she says.

In any molecule value chain, hydrogen included, Chart serves customers that are the producers of the molecule, those who store and transport it as well as those who are the end users, Evanko adds. “This allows us to connect those who are selling the molecule with those who need it.”

Looking ahead, CEH is preparing to meet with investors in the lead-up to an April, 2023 final investment decision deadline for the Texas project. And it is being advised by RockeTruck for another RFP seeking fuel cell vehicles to transport hydrogen from the site as the trucks become available – a design that will likely include hydrogen fueling stations at the production facility as well as at the Port of Corpus Christi, Bair says.

CEH also has plans to develop its own geothermal plants and explore the role that nuclear energy can play in green hydrogen. Bair Energy recently hired Eric Young as its VP of engineering and technology from NuScale, where he worked on the research team that received approvals from the U.S. Nuclear Regulatory Commission for a small modular nuclear reactor.

“We’re a technology-driven owner-operator,” Bair says. “We’re all technologists, which means we’re pathological believers in technology. We’re all looking for transformational energy.”

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Ambient Fuels evaluating hydrogen project acquisitions

The company is well capitalized following a $250m equity investment from Generate Capital and is now opportunistically reviewing an initial slate of project M&A offerings.

Following an equity investment from Generate Capital, Ambient Fuels has begun to evaluate potential acquisitions of hydrogen projects that are under development, CEO Jacob Susman said in an interview.

“We’ve seen our first project M&A opportunities come through in the last 10 days or so,” Susman said.

Three projects for sale involve land positions, he said. Those that appear most attractive have a clear line of site to offtake or a strong approach to renewable power supply. Two out of three are not on the Gulf Coast.

“In no instance are these brokered deals,” Susman said.

Following the $250m equity investment from Generate Capital, Ambient is capitalized for several years and has no immediate plans to seek debt or tax equity, Susman said. The transaction was done without the help of a financial advisor.

Moving forward Ambient is open to JV formation with a partner that can help access offtake and renewable power, Susman said. Those points will drive future capital investment in the company and were resources that Generate brought to the table besides money.

According to ReSource‘s project tracker, Ambient is involved in at least two of the hubs that were encouraged by the DOE to submit a final application: California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), and the Port of Corpus Christi Green Hydrogen Hub.

In 2021 Ambient completed a funding round led by SJF Ventures. Several other VC funds and angel investors also participated.

In January The Hydrogen Source reported that Ambient was in exclusivity with an equity provider.

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Government money still top of mind for early movers in US hydrogen

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders, experts say.

The US Department of Energy came out this week with the news that it was not yet ready to release the long-awaited winners of its $8bn hydrogen hubs funding opportunity, as Secretary of Energy Jennifer Granholm noted Monday at the Hydrogen Americas Summit in Washington, DC.

The delay disappointed many in the industry, who are also waiting for crucial guidance from the IRS on rules for clean hydrogen tax credits.

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders.

Speakers on a financing panel at the summit yesterday pointed to the successful FID of the Air Products-backed NEOM green hydrogen project in Saudi Arabia as an effective project finance model, where major sponsors working together helped to de-risk the proposal and attract support from export credit agencies and global banks.

In the US, large players like ExxonMobil (Hydrogen Liftoff Hub), NextEra (Southeast Hydrogen Network), and Chevron (ACES Delta) have applied for DOE hydrogen hubs funding, according to the results of a FOIA request, joining major utilities and other oil and gas companies like bp and Linde in the running for funds.

In addition to inadequate regulatory guidance, some developers have already started grumbling that the proposed government assistance will not be enough to meet the scale of decarbonization needs. And the nascent clean fuels project finance market still needs to sift through techno-economic challenges in order to reach its potential, according to comments made yesterday on a panel called Financing Clean Hydrogen.

Leopoldo Gomez, a vice president of global infrastructure finance at Citi, sees a big role for the project finance framework for hydrogen facilities undertaken by independent project developers as well as strategics looking to strike the appropriate risk allocation for new projects.

And Michael Mudd, a director on BofA’s global sustainable finance team, said hydrogen projects are similar in many ways to established facilities like power and LNG, but with additional complexities, like understanding the impact of intermittent power and how to appropriately scale technologies.

Credibility

This year, Pennsylvania-based Air Products along with ACWA Power and NEOM Company finalized and signed an $8.5bn financing agreement for NEOM the project, which will build 4 GW of renewables powering production of up to 600 tons per day of hydrogen. The National Development Fund and the Saudi Industrial Development Fund kicked in a total of $2.75bn for the project, with the balance covered by a consortium of 23 global lenders.

“It is very important from the financing side to make sure the parties that are at the table are the best in the business, and that’s what we’re seeing with the projects that are able to receive either commitments from the DOE Loan Programs office or from commercial lenders and export credit agencies,” Gomez said.

Highly credible engineering firms are also critical to advance projects, and the EPCs themselves might still need to get comfortable integrating new technologies that add more complexity to projects when compared to power generation or LNG projects.

“The bottom line is that having someone that’s very credible to execute a complex project that involves electrolyzers or carbon capture or new renewable power generation within the parameters of the transaction” is critical for providing risk mitigation for the benefit of investors, Gomez added.

Funding sources

Additional funding sources are intended to be made available for clean fuels projects as part of the Inflation Reduction Act, the panelists said.

Most notably, tax credit transferability and the credits in section 45Q for carbon capture and sequestration and 45V for clean hydrogen are available on a long-term basis and as a direct-pay option, which would open up cash flows for developers.

“If you can use [tax credit transfers] as a contract, you can essentially monetize the tax credits in the form of debt and equity,” Mudd said. And if a highly rated corporate entity is the counterparty on the tax transfer, he added, the corporate rating of the buyer can be used to leverage the project for developers that don’t have the tax capacity.

Still, section 45V is potentially the most complex tax credit the market has ever seen, requiring a multi-layer analysis, according to Gomez, who advised patience among developers as prospective lenders evaluate the potential revenue streams from the tax credit market.

“First and foremost we’ll be looking at cash flows driven by the offtake contract, but it will be highly likely that lenders can take a view on […] underwriting 10 years of 45V at a given amount,” Gomez added.

Crucial guidance on how to conduct a lifecycle emissions analysis is still outstanding, however, making it difficult to bring all project parties to the table, according to Shannon Angielski, a principal at law and government relations firm Van Ness Feldman.

“It’s going to hinge on how the lifecycle analyses are conducted and how you have some transparency across states and borders” regarding the potential for a green premium on clean hydrogen, she added.

Agency support

In Canada, the Varennes Carbon Recycling plant in Quebec has received CAD 770m of provincial and federal support, primarily from the Canada Infrastructure Bank and the province of Quebec, noted Amendeep Garcha of Natural Resources Canada.

Around CAD 500m of funding from the Canada Infrastructure bank is also going to support hydrogen refueling infrastructure, Garcha said, with the aim of establishing a hydrogen highway that will form the basis of the hydrogen ecosystem in Quebec.

Pierre Audinet, lead energy specialist from World Bank Group, noted how the international development agency was stepping in to provide support for projects that might otherwise not get off the ground.

“In the world where I work, we face a lot of scarcity of capital,” he noted, adding that the World Bank has backed the implementation of clean fuels policies in India with a $1.5bn loan.

Additionally, the World Bank has supported a $150m project in Chile, providing insurance and capital for a financing facility that will reduce the costs of electrolyzers. Chile, while it benefits from sun and wind resources, said Audinet, is less competitive when it comes to transportation given its geographic location.

The agency is also working to help the local government in the Northeastern Brazil port of Pecem. Shared infrastructure at the port will help reduce risks for investors who have taken a stake in the port facilities, Audinet said.

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