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Exclusive: Geologic hydrogen startup raising Series A

A US geologic hydrogen startup that employs electric fracking with a pilot presence on the Arabian Peninsula is raising a $40m Series A and has identified a region in the midwestern US for its first de-risked project.

Eden GeoPower, a Boston-based geologic hydrogen technology provider, is engaged in raising a Series A and has a timeline on developing a project in Minnesota, CEO and co-founder Paris Smalls told ReSource.

The Series A target is $40m, with $10m being supplied by existing investors, Smalls said. This round, the company is looking for stronger financial investors to join its strategic backers.

The company has two subsidiaries wholly owned by the parent: one oil and gas-focused and one climate-focused. The Series A is topco equity at the parent level.

Eden was one of 16 US Department of Energy-selected projects to receive funding to explore geologic hydrogen; the majority of the others are academic lab projects. Eden has raised some $13m in equity and $12m in grant funding to date.

Beyond geothermal

Eden started as a geothermal resource developer, using abandoned oil and gas wells for production via electric fracking.

“We started seeing there were applications way beyond geothermal,” Smalls said. Early grant providers recommended using the electric fracking technology to go after geologic hydrogen reservoirs, replacing the less environmentally friendly hydraulic fracking process typically used.

A test site in Oman, where exposed iron-rich rock makes the country a potential future geologic hydrogen superpower, will de-risk Eden’s technology, Smalls said. Last year the US DOE convened the first Bilateral Engagement on Geologic Hydrogen in Oman.

Early developments are underway on a demonstration project in Tamarack, Minnesota, Smalls said. That location has the hollow-vein rocks that can produce geologic hydrogen.

“We likely won’t do anything there until after we have sufficiently de-risked the technology in Oman, and that should be happening in the next 8 months,” Smalls said. “There’s a good chance we’ll be the first people in the world to demonstrate this.”

Eden is not going after natural geologic hydrogen, but rather stimulating reactions to change the reservoir properties to make hydrogen underground, Small said.

The University of Minnesota is working with Eden on a carbon mineralization project, Smalls said. The company is also engaged with Minnesota-based mining company Talon Metals.

Revenue from mining, oil and gas

Eden has existing revenue streams from oil and gas customers in Texas and abroad, Smalls said, and has an office in Houston with an expanding team.

“People are paying us to go and stimulate a reservoir,” he said. “We’re using those opportunities to help us de-rick the technology.”

The technology has applications in geothermal development and mining, Smalls said. Those contracts have been paying for equipment.

Mining operations often include or are adjacent to rock that can be used to produce geologic hydrogen, thereby decarbonizing mining operations using both geothermal energy and geologic hydrogen, Smalls said.

“On our cap table right now we have one of the largest mining companies in the world, Anglo American,” Smalls said. “We do projects with BHP and other big mining companies as well; we see a lot of potential overlap with the mining industry because they are right on top of these rocks.

Anti-fracking

Eden is currently going through the process of permitting for a mining project in Idaho, in collaboration with Idaho National Labs, Smalls said.

In doing so the company had to submit a public letter explaining the project and addressing environmental concerns.

“We’re employing a new technology that can mitigate all the issues [typically associated with fracking],” Small said.

With electric fracturing of rocks, there is no groundwater contamination or high-pressure water injection that cause the kind of seismic and water quality issues that anger people.

“This isn’t fracking, this is anti-fracking,” Smalls said.

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Viking testing first hydrogen-powered cruise ship

Viking is using the small H2 system to test how hydrogen fuel could be used at a larger scale.

The Viking cruise line has received its first ship testing the use of hydrogen power, according to a press release.

The ship, the Viking Neptune, is equipped with a small hydrogen fuel system for on board operations. Viking is using the small system as a test to determine how hydrogen fuel could be used at a larger scale in future newbuilds.

Delivery took place when the ship was presented at Fincantieri’s shipyard in Ancona, Italy.

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Macquarie Commodities supporting Mexico low-carbon methanol project

The project is expected to produce approximately 300,000 MT of green methanol from captured carbon and green hydrogen and 1.8 million MT of blue methanol per year from natural gas with carbon capture.

Transition Industries LLC has entered into a Master Services and Marketing Agreement with Macquarie Commodities Trading, an affiliate of Macquarie Group’s Commodities and Global Markets business, for its Pacifico Mexinol project, a 6,145 metric tons (MT) per day methanol production facility near Topolobampo, Sinaloa, Mexico, according to a news release.

When it commences operations, Pacifico Mexinol is expected to be one of the largest single low carbon chemicals facilities in the world – producing approximately 300,000 MT of green methanol from captured carbon and green hydrogen and 1.8 million MT of blue methanol per year from natural gas with carbon capture.

Under the terms of the MSMA, Macquarie is responsible for marketing all the production from Pacifico Mexinol to customers on a global basis in accordance with methanol offtake agreements, the provisioning of financial hedging services as required by the Project, and supporting the Project in commodity planning and contracting for all required feedstock. The MSMA has a term of 15 years from the Commercial Operations Date of the Project.

The International Finance Corporation, a member of the World Bank Group, is participating in the co-development of this global-scale low carbon methanol plant. IFC would act as project co-developer with Transition Industries LLC, and as the co-lead mandated arranger alongside Kreditanstalt fur Wiederaufbau IPEX. The MSMA and financing for Pacifico Mexinol were announced at a formal signing ceremony for the Joint Project Development Agreement in Dubai, UAE, alongside the COP28 conference.

Pacifico Mexinol is expected to reach Final Investment Decision in 2024 and Commercial Operations Date in late 2027.

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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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Exclusive: Carbon conversion startup planning capital raise

A Halliburton Labs-backed startup is developing a pilot plant in the Pacific Northwestern US, while forming financial relationships for an industrial-scale carbon conversion facility in the same location.

OCOchem, a Washington state-based carbon conversion startup, will seek new capital partners to build its first commercial scale facility in 2026, CEO Todd Brix said in an interview.

Starting in late 2024 or early 2025, the company will likely go to market for new liquidity – including project debt and equity, Brix said. He declined to talk about capex, but said the first commercial plant in Richland, Washington will cost “multiple tens of millions of dollars.”

The company is working with two EPCs now and is represented legally by Miller Nash law firm in the Pacific Northwest, Brix said. The company does not have a formal relationship with an investment bank but will likely form one for a Series A and later rounds.

“We’ve been in touch with a number of private equity and project finance people,” Brix said of early-stage discussions.

OCOchem is considering land options in Richland for its first plant and is organizing to begin permitting, Brix said. There is opportunity to form relationships with industrial partners in need of an offtaker for their CO2 emissions and new incremental revenue streams, as well as customers for chloral hydrates and other formic acid products.

“We expect to build hundreds of these plants all around the planet,” Brix said, referring to the process of electrochemically converting emitted CO2 and water to formic acid, which can then be used to make a suite of products like hydrogen, carbon monoxide, and formate (methanoate) derivatives. “We are close to industrial size on our plants right now.”

CO2 is captured from steam methane reformers, natural gas processing and piping, and ammonia production, among other processes. The gas is then combined with water in a cellular, modular process producing formic acid, derivatives of which can be used in a range of industries like pharmaceuticals.

The company recently raised $5m in seed funding from lead investor TO VC, which joined backers LCY Lee Family Office, MIH Capital Management, and Halliburton Labs. An additional $8m has been raised in grant funding from the US departments of Energy (DOE) and Defense (DOD).

The company is also partnered with the Nutrien Corporation on a small scale facility in Kennewick, Washington, just upriver from Richland, Brix said. Financing for that project is largely arranged with the FEED completed.

Brix owns a majority of the company with his father.

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Exclusive: Carbon capture firm raising $1.2bn for ammonia facility

A carbon capture and technology firm is conducting a FEED study for a blue ammonia facility it expects will cost some $1.2bn in traditional project finance. The company also has a pipeline of biomass-to-electricity (or “biome”) projects in the works.

8 Rivers Capital, the North Carolina-based carbon capture and technology firm backed by South Korea’s SK, Inc., is planning to raise some $1.2bn for its first ammonia production facility in Texas, Chief Development Officer Damian Beauchamp said in an interview.

The firm is conducting a FEED study for its Cormorant blue ammonia facility in Port Arthur, Texas, which will be finished in October, Beauchamp said. The firm is not using a financial advisor.

The money will be raised in a 30/70 split between equity and debt, he said. SK will take 100% of the facility’s production. 8 Rivers anticipates bringing the facility online in 2027 or 2028.

The company will seek to maintain significant ownership in its ammonia facilities. Once the FEED is finished on one the firm will start another until the company has completed between 10 and 20 of these facilities, Beauchamp said.

“We have the ambition to dominate the ammonia/zero carbon fuels space,” Beauchamp said.

‘BIOME’

In a new vertical start of electricity generation production, 8 Rivers is now scouting locations to develop its first biomass-to-electricity generation facilities in the US, Beauchamp said.

The projects, referred to as “biome” by the firm, will use forestry biomass as a feedstock in plants up to 250 MW in size. Unlike ammonia, 8 Rivers will not seek to keep ownership in an IPP play, but rather solicit co-investment from utility and industrial offtakers.

The southeastern US is a region of particular interest, Beauchamp said, because of a long growing season, the abundance of feedstock from timber, lumber and paper product producers, and proximity to existing CO2 management and transport infrastructure.

“That’s our general focus area for that first project,” he said of the deep south of Texas, Mississippi, Louisiana and Alabama.

The strategy is to take on strategic ownership partners – utilities and industrial powers users — as early as possible to finance development, he said. Large entities, including foreign utilities, could also take ownership interest in projects, not dissimilar from investment in LNG facilities.

Projects will likely cost $1bn and up, and the firm anticipates having the first progressing in earnest by 2029. Eventually 8 Rivers seeks to develop a portfolio of four or five of these projects at 250 MW each along with additional projects of a smaller size, Beauchamp said.

The first project should also be able to sell 2.7m tonnes of carbon credits per annum, Beauchamp said.

8 Rivers’ Calcite technology was announced as a winner of the Department of Energy’s Direct Air Capture (DAC) Hub grant, as an anchor technology in the Alabama regional DAC hub led by Southern States Energy Board.

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exclusive

Inside Intersect Power’s green hydrogen plans

California-based renewable energy developer Intersect Power anticipates huge capital needs for a quartet of regional energy complexes co-locating wind and solar with green hydrogen production in the Texas Gulf Coast, California and the American West.

Intersect Power, a solar developer that completed a $750m capital raise last year, is developing four large-scale green hydrogen projects that could eventually be spun off into a separate company, CEO Sheldon Kimber said in an interview.

Four regional complexes of 1 GW or more, co-located with renewables, are in development, he said. The first phases of those, totaling several hundred megawatts, will come online between 2026 and 2028.

Initial offtake markets include transportation, sustainable aviation fuel, and hydrogen for industrial use, Kimber said. Ultimately Intersect is aiming to serve ammonia exporters in the US Gulf Coast, particularly those exporting to Japan, Kimber said, adding that the company could contract with ammonia producers. He recently wrapped up a nine-day, fact-finding trip to Japan to better understand what he believes will be the end market for Intersect’s green ammonia.

“If you don’t know who your customer’s customer is, you’re going to get a bad deal,” Kimber said.

Intersects projects under development involve behind-the-meter electrolysis, co-located with Intersect’s wind and solar generation plants. In 2021 the company signed an MOU with electrolyzer manufacturer Electric Hydrogen. The contract is for 3 GW.

Intersect controls the land and is in the process of permitting the four projects, located in Texas, California and another western US location that Kimber declined to name. The primary focus now is commercial development of the offtake and transportation, he said.

‘Boatload of equity’

Kimber said the company will be ready to announced details of the projects when they are ready to seek financing. He estimates that upwards of $12bn will need to be raised for the package of complexes.

“There’s going to be an enormous need for capital,” Kimber said. Debt will make up between 60% and 90% of the raising, along with “a boatload of equity,” he said. Existing investors will likely participate, but as the numbers get bigger new investors will be brought on board.

Intersect has worked with BofA Securities and Morgan Stanley on past capital raise processes, and also has strong relationships with MUFG and Santander.

Moving forward the company could have a broader need for advisory services and could lend knowledge of the sector in an advisory capacity itself, Kimber said.

“The scope and scale of what we’re doing is big enough and the innovative aspect of what we’re doing is advanced enough that I think we have a lot we can bring to these early-stage financings,” Kimber said. “I think we’re going to be a good partner for advisory shops.”

In the short term Intersect has sufficient equity from its investors and is capitalized for the next 18-to-24 months, Kimber said. Last summer the company announced a $750m raise from TPG Rise Climate, CAI Investments and Trilantic Energy Partners North America.

“People don’t want to pay ahead for the growth in fuels,” Kimber said, adding that reaching commercial milestones will build a compelling valuation.

Intersect could spin off its hydrogen developments to capitalize them apart from renewables, Kimber said.

“Every single company in this space is looking at that,” he said. “Do you independently finance your fuels business?”

Avoiding the hype

Right now the opportunity to participate in hydrogen is blurry because there is so much hype following passage of the IRA, Kimber said. Prospective investors should be focused on picking the right partners.

“What you’re seeing right now is everybody believing the best thing for them,” Kimber said, noting that his company has decided to keep relatively quiet about its activities in the clean fuels space to avoid getting caught up in hype. “The IRA happened, and every electrolyzer company raised their prices by fifty percent.”

Of those companies that have announced hydrogen projects in North America, Kimber said he believes only a handful will be successful. Those companies that have successfully developed renewables projects of more than 500 MW are good candidates, as are companies that have managed to keep a fluid supply chain with equipment secured for the next five years.

“That is a very short list,” he said.

Lenders on the debt side will want to start determining how projects will get financed, and which projects to finance, in the next 18 months, Kimber said.

Finding those who have been innovating on the front-end for years and not just jumped in recently is a good start, Kimber said.

“Hydrogen will happen, make no mistake,” Kimber said. He pointed to the recent European directive that 45% of hydrogen on the continent be green by 2030 and Japan’s upcoming directive to potential similar effect. Once good projects reach critical points in their development they will start to trade, probably in late 2024, he said.

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