Resource logo with tagline

Exclusive: Ammonia plant sale paused until commercial operations

The sale process for a Texas ammonia plant has been paused until the facility reaches commercial operations.

Gulf Coast Ammonia, the developer of a world-scale ammonia plant in Texas City, Texas, has paused a sale process until the plant reaches commercial operations, according to two sources familiar with the matter.

The process to sell the plant, which will produce 1.3 million tons of ammonia per year, was underway earlier this year, led by Jefferies as sellside advisor. The plant was expected to reach COD in 2023, according to documentation.

The project was initiated by Agrifos Partners LLC and advanced to FID in collaboration with joint venture development partners Mabanaft and Macquarie Capital. Following the FID taken in late 2019, GCA is wholly owned by a joint venture of Mabanaft and Lotus Infrastructure (formerly known as Starwood Energy).

GCA is investing $600m towards the construction, operation, and ownership of the ammonia plant, which is situated on land owned by Eastman Chemical Company within Texas City’s industrial park. It includes a portion of Eastman’s port access. 

In tandem with the ammonia plant construction, Air Products is building a $500m steam methane reformer to provide hydrogen to the plant via pipeline. Air Products noted in a recent investor presentation that the SMR project recently came onstream.

Officials at Lotus, Mabanaft, and Jefferies did not reply to inquiries seeking comment.

Unlock this article

The content you are trying to view is exclusive to our subscribers.
To unlock this article:

You might also like...

Tidewater Midstream and Tidewater Renewables appoint interim CEO

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

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

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

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

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

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

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

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

Read More »

PCC Hydrogen issues ethanol-to-hydrogen tech

A hydrogen from bio-feedstock provider in Kentucky is marketing itself as a pathway to efficient blue hydrogen and point-of-use production.

PCC Hydrogen has issued its patented technology for converting ethanol into hydrogen, according to a news release.

By capturing the CO2 byproduct of the PCC H2 hydrogen production process, the company can produce a negative carbon index hydrogen product, the release states. PCC is exploring the use of its hydrogen to lower the emissions profile of any heating/calcining process.

The process is being touted to solve for the high cost of H2 transportation, as a lot of existing infrastructure is compatible with ethanol.

“With our conversion technology, ethanol can be a valuable source of hydrogen for distributed generation in locations proximal to the point of use,” CTO Dr. Jeffrey Harrison said in the release. “While the immediate focus is on ethanol as a feedstock, the technology is equally applicable to renewable sources of natural gas from landfills and anaerobic digesters.”

The ability to capture CO2 from the production process opens the door to producing blue hydrogen from conventional natural gas without greenhouse gas emissions, the release states.

Read More »

Black Hills Energy studying hydrogen production from coal

BHE will partner with Babcock & Wilcox to study the cost and economics of deploying chemical looping technology at commercial scale to produce hydrogen from Powder River Basin coal and a nearly pure stream of CO2.

Black Hills Energy (BHE) has selected its BrightLoop hydrogen generation technology from Babcock & Wilcox for the feasibility study of a proposed project to produce clean hydrogen from coal and capture carbon dioxide (CO2) emissions at BHE’s Neil Simpson Power Plant in Gillette, Wyo.

BrightLoop is a novel chemical looping technology that can use a variety of fuels to produce clean energy with complete CO2 capture, according to a news release from the companies.

BHE will partner with B&W to study the cost and economics of deploying the BrightLoop chemical looping technology at commercial scale to produce low carbon intensity hydrogen gas from Powder River Basin (PRB) coal and a nearly pure stream of CO2 suitable for beneficial use or storage without the need for expensive carbon separation equipment.

“As the United States and much of the world transitions to near-zero emissions fuels, our BrightLoop technology – which captures COand other pollutants while producing hydrogen – can provide a vital pathway to utilize our abundant natural resource of coal in a net-zero world,” said B&W Executive Vice President and Chief Operating Officer Jimmy Morgan.

“We are excited to utilize our highly experienced U.S. engineering team to work with BHE to develop a solution that will help them achieve their goals of creating and preserving jobs, diversifying Wyoming’s energy production and establishing new markets for the state’s natural resources,” Morgan said. “We thank BHE for this opportunity and for the confidence they have shown in B&W’s BrightLoop technology.”

Mark Stege, Black Hills Energy’s vice president of Wyoming operations agreed, adding, “Over 30 years of research has led us to this opportunity to unite clean energy technology with Wyoming’s important and abundant energy resources. We appreciate the partnership with B&W and the prospect of leveraging innovative hydrogen technology to deliver efficient energy to customers.”

B&W’s BrightLoop chemical looping technology is part of its ClimateBright suite of decarbonization and hydrogen technologies. The BrightLoop process uses a proprietary, regenerable particle and has been demonstrated to effectively separate CO2 while producing hydrogen, steam and/or syngas.

Read More »

Exclusive: Methanol electrolyzer start-up gearing up for seed capital raise

An early-stage technology company seeking to commercialize an electrolyzer that produces methanol from CO2 at ambient temperature and pressure is preparing its first capital raise.

Oxylus Energy, a methanol technology and project development start-up, is preparing to kick off its first capital raise later this month.

The Yale-based firm is seeking to raise $4m in seed funding, with proceeds funding the advancement of a production-scale CO2-to-methanol electrolyzer cell and its first commercial agreements for offtake, CEO Perry Bakas said in an interview.

Oxylus aims to commercialize an electrolyzer that creates methanol from CO2 at room temperature and pressure, and also plans to develop and operate its own methanol production plants, he said.

The technology, which will scale to larger versions in coming years, recently hit a key milestone with the validation of a 5cm2 platform.

The seed capital raise would provide approximately 26 months of runway, according to Bakas. The company would then raise between $20 – $30m in a follow-on Series A in late 2026.

“What we’re gonna do with the Series A is put that first electrolyzer into the ground,” he said. “It’ll be our first revenue-producing methanol.”

Oxylus is currently owned by Bakas and his fellow co-founders. The company has been entirely grant funded to this point. DLA Piper is advising as the law firm on the seed capital raise.

“I think the most important thing about the technology is it’s the most energy-efficient pathway to making renewable methanol,” he said. “At the right energy prices, you’re below cost parity with fossil-derived methanol. When that happens, I think it’ll become a very interesting development scenario.”

Oxylus is focused on bringing the so-called green premium down to zero, Bakas said, noting that it requires achieving scale in electrolyzer production or partnering with established electrolyzer manufacturers.

Methanol for shipping

Oxylus will seek to introduce its technology into target markets that are already using methanol as a feedstock, like high-value petrochemicals. In the longer term, shipping and aviation are likely to become attractive markets. Taken together, the company believes methanol has the potential to decarbonize 11% of global emissions.

Methanol will compete with ammonia for primacy as a shipping fuel in the future, but Bakas believes methanol is the better option.

“These are massive markets – they need a lot of solutions, and quickly,” he said. “But ammonia is not energy dense, and it doesn’t integrate with existing infrastructure.”

The International Energy Agency recently projected that while ammonia will be cheaper to make, methanol is easier to handle, resulting in roughly similar cost profiles for e-methanol and green ammonia. The added cost for methanol production, the report found, is likely to come from a scarcity of biogenic CO2.

On that topic, Bakas acknowledged that the methanol pathway still requires combustion of carbon, but emphasized his technology’s ability to displace existing fossil fuel-based methanol production.

“The distinction we need to make is: are these virgin hydrocarbons or are they recycled hydrocarbons? If you’re just continuously pumping new CO2 out of the ground into the atmosphere, you’re gonna continue to cause climate change,” he said.

“The technologies that we are building in this suite of technologies that cover direct air capture, point source capture, carbon conversion, that whole CCUS world,” he added, “are really working to monitor and create a homeostasis in the atmospheric balance of CO2.”

Oxylus recently completed a lifecycle assessment of greenhouse gas emissions, Bakas said, finding that its fuels are expected to reduce CO2 emissions by 95% at optimal voltage compared to natural gas steam methane reforming.

Read More »
exclusive

Interview: Vinson & Elkins’ Alan Alexander on the emerging hydrogen project development landscape

Vinson & Elkins Partner Alan Alexander, whose clients include OCI and Lotus Infrastructure, has watched the hydrogen project development space evolve from a fledgling idea to one that is ready for actionable projects.

Vinson & Elkins Partner Alan Alexander, whose clients include OCI and Lotus Infrastructure, has watched the hydrogen project development space evolve from a fledgling idea to one that is ready for actionable projects.

In the meantime, a number of novel legal and commercial issues facing hydrogen project developers have come to the forefront, as outlined in a paper from the law firm this week, which serves as a guide for thinking through major development questions that can snag projects.

In an interview, Alexander, a Houston-based project development and finance lawyer, says that, although some of the issues are unique – like the potential for a clean fuels pricing premium, ownership of environmental attributes, or carbon leaking from a sequestration site – addressing them is built on decades of practice.

“The way I like to put it is, yes, there are new issues being addressed using traditional tools, but there’s not yet a consensus around what constitutes ‘market terms’ for a number of them, so we are having to figure that out as we go,” he says.

Green hydrogen projects, for example, are “quite possibly” the most complex project type he has seen, given that they sit at the nexus between renewable electricity and downstream fuels applications, subjecting them to the commercial and permitting issues inherent in both verticals.

But even given the challenges, Alexander believes the market has reached commercial take-off for certain types of projects.

“When the hydrogen rush started, first it was renewables developers who knew a lot about how to develop renewables but nothing about how to market and sell hydrogen,” he says. “Then you got the people who were very enthusiastic about developing hydrogen projects but didn’t know exactly what to do with it. And now we’re beginning to see end-use cases develop and actionable projects that are very exciting, in some cases where renewables developers and hydrogen developers have teamed up to focus on their core competencies.”

A pricing premium?

In the article, Vinson & Elkins lawyers note that commodities pricing indices are not yet distinguishing between low-carbon and traditional fuels, even though a clean fuel has more value due to its low-carbon attributes. The observation echoes the conclusion of a group of offtakers who viewed the prospect of paying a premium for clean fuels as unrealistic, as they would need to pass on the higher costs to customers.

Eventually, Alexander says, the offtake market should price in a premium for clean products, but that might depend in the near term on incentives for clean fuels demand, such as carbon offsets and levies, like the EU’s Carbon Border Adjustment Mechanism.

“Ultimately what we need is for the market to say, ‘I will pay more for low-carbon products,’” he says. “The mindset of being willing to pay more for low-carbon products is going to need to begin to permeate into other sectors. 30 or 40 years ago the notion of paying a premium for an organic food didn’t exist. But today there are whole grocery store chains built around the idea. When the consumer is willing to pay a premium for low-carbon food, that will incentivize a farmer to pay a premium for low carbon fertilizer and ammonia, which will ultimately incentivize the payment of a premium for low-carbon hydrogen. The same needs to repeat itself across other sectors, such as fuels and anything made from steel.”

The law firm writes that US projects seeking to export to Europe or Asia need to take into account the greenhouse gas emissions and other requirements of the destination market when designing projects.

In the agreements that V&E is working on, for example, clients were first focused on structuring to make sure they met requirements for IRA tax credits and other domestic incentives, Alexander says. Meanwhile, as those clean fuels made their way to export markets, customers were coming back with a long list of requirements, “so what we’re seeing is this very interesting influx” of sustainability considerations into the hydrogen space, many of which are driven by requirements of the end-use market, such as the EU or Japan.

The more stringent requirements have existed for products like biofuels for some time, he adds, “but we’re beginning to see it in hydrogen and non-biogenic fuels.”

Sharing risk

Hydrogen projects are encountering other novel commercial and legal issues for which a “market” has not yet been developed, the law firm says, especially given the entry of a raft of new players and the recent passage of the Inflation Reduction Act.

In the case of a blue hydrogen or ammonia project where carbon is captured and sequestered but eventually leaks from a geological formation, for example, no one knows what the risk truly is, and the market is waiting for an insurance product to provide protection, Alexander says. But until it does, project parties can implement a risk-sharing mechanism in the form of a cap on liabilities – a traditional project development tool.

“If you’re a sequestration party you say, ‘Yeah, I get it, there is a risk of recapture and you’re relying on me to make sure that it doesn’t happen. But if something catastrophic does happen and the government were to reclaim your tax credits, it would bankrupt me if I were to fully indemnify you. So I simply can’t take the full amount of that risk.’”

What ends up getting negotiated is a cap on the liability, Alexander says, or the limit up to which the sequestration party is willing to absorb the liability through an indemnity.

The market is also evolving to take into account project-on-project risk for hydrogen, where an electrolyzer facility depends on the availability of, for example, clean electricity from a newly built wind farm.

“For most of my career, having a project up and reaching commercial operations by a certain date is addressed through no-fault termination rights,” he says. “But given the number of players in the hydrogen space and the amount of dollars involved, you’re beginning to see delay liquidated damages – which are typically an EPC concept – creep into supply and offtake agreements.”

If a developer is building an electrolyzer facility, and the renewables partner doesn’t have the wind farm up and running on time, it’s not in the hydrogen developer’s interest to terminate through a no-fault clause, given that they would then have a stranded asset and need to start over with another renewable power provider. Instead, Alexander says, the renewables partner can offset the losses by paying liquidated damages.

Commercial watch list

In terms of interesting commercial models for hydrogen, Alexander says he is watching the onsite modular hydrogen development space as well as power-to-fuels (natural gas, diesel, SAF), ammonia and methanol, given the challenges of transporting hydrogen.

“If you’re going to produce hydrogen, you need to produce it close to the place where it’s going to be consumed, because transporting it is hard. Or you need to turn it into something else that we already know how to transport – natural gas, renewable diesel, naphtha, ammonia.”

Alexander believes power-to-fuels projects and developers that are focused on smaller, on-site modular low-carbon hydrogen production are some of the most interesting to watch right now. Emitters are starting to realize they can lower their overall carbon footprint, he says, with a relatively small amount of low-carbon fuels and inputs.

“The argument there is to not completely replace an industrial gas supplier but to displace a little bit of it.”

At the same time, the mobility market may take off with help from US government incentives for hydrogen production and the growing realization that EVs might not provide a silver-bullet solution for decarbonizing transport, Alexander adds. However, hydrogen project developers targeting the mobility market are still competing with the cost of diesel, the current “bogey” for the hydrogen heavy mobility space, Alexander says.

Read More »
exclusive

Methanol-to-hydrogen firm planning capital raise

An early-stage provider of distributed methanol-to-hydrogen solutions is planning a capital raise as it scales up.

Kaizen Clean Energy, a Houston-based methanol-to-hydrogen fuel company, is planning to raise additional capital in support of upcoming projects.

The company, which uses methanol and water to produce hydrogen with modular units, recently completed a funding round led by Balcor Companies, in which Balcor took a minority interest in Kaizen.

Additional funding in the capital raise was provided by friends and family, Kaizen co-founder and chief commercial officer Eric Smith said in an interview.

But with its sights on larger project opportunities this year, the company is already targeting an additional capital raise to support continued growth, Smith said. He declined to comment further on the capital raise and potential advisors, but noted that the company’s CFO, Craig Klaasmeyer, is a former Credit Suisse banker.

Kaizen’s methanol model utilizes a generator license from Element 1 and adds in systems to produce power or hydrogen, targeting the diesel generator market, EV charging and microgrids as well as hydrogen fueling and industrial uses.

Compared to trucking in hydrogen, the model using methanol, an abundant chemical, cuts costs by around 50%, Smith said, noting that Kaizen’s containers are at cost parity with diesel.

In addition, the Kaizen container is cleaner than alternatives, producing no nitric or sulfur oxide, according to Smith. Its carbon intensity score is 45, compared to 90 for the California electric grid and 100 for diesel generators.

Smith also touts a streamlined permitting process for Kaizen’s containerized product. The company recently received a letter of exemption for the container from a California air district due to low or no emissions. The product similarly does not require a California state permit and similarly, when off grid, no city permits are required, he added.

Read More »

Welcome Back

Get Started

Sign up for a free 15-day trial and get the latest clean fuels news in your inbox.