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Exclusive: Natural gas decarbonization firm in capital raise

A Canadian methane pyrolysis firm is working with a pair of financial advisors and is in the market with an equity capital raise.

Ekona Power, the industrial hydrogen solutions firm based in British Columbia, is raising a Series B of between $50m and $80m, two sources familiar with the matter told ReSource.

RBC Capital Markets is conducting the raise, the sources said, while the Vancouver office of Fort Capital is also involved.

The capital raise would fund the second stage of decarbonization efforts at the Gold Creek Natural Gas plant in Alberta.

The company is targeting US investors, particularly large strategics, one of the sources said, and has had discussions with ExxonMobil Low Carbon Solutions.

Ekona is eyeing expansion in the US Pacific Northwest, Western and central Canada, Australia, Saudi Arabia and China, the source added.

In early 2022 TransAlta made a CAD 2m equity investment in Ekona. Baker Hughes participated in the company’s Series A.

Ekona and Fort Capital declined to comment. RBC did not respond to requests for comment.

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DOE releases billion-ton biomass report

The report, which is released only every five years, details the opportunities and constraints to reaching 1 billion tons of biomass production per year in the U.S., and includes county-level data on resource availability.

The Department of Energy’s 2023 Billion-Ton Report provides a detailed analysis of the potential biomass resource availability in the United States, finding that more than 1 billion tons of biomass could be sustainably produced annually in the U.S., given adequate market conditions. 

This production capacity could significantly expand the current bioenergy economy, contingent upon the realization of market demand and adherence to environmental sustainability constraints.

The decarbonization of America’s transportation and industrial sectors depends on a significant increase in the production of renewable biomass for use in liquid fuel, bio-based chemicals, and other products, the DOE said in a press release. Highlights from the report include:  

  • The U.S. currently uses about 342 million tons of biomass, including corn grain for ethanol and wood/wood waste for heat and power, to meet roughly 5% of America’s annual energy demand 
  • The U.S. can triple the production of biomass, producing an estimated 60 billion gallons of low greenhouse gas liquid fuels, while still meeting the projected demand for food, feed, fiber, conventional forest products, and exports 
  • Currently available but unused biomass resources can add around 350 million tons of additional biomass per year above current uses and double the U.S. bioeconomy 
  • Biomass resources, like energy crops, in a future mature market can provide more than 400 million tons of biomass per year above current uses 
  • Further technological innovations could lead to evolving and emerging resources that represent additional biomass potential 
  • The analysis ensures sustainable outcomes by accounting for potential risks to soil, air and water quality, water availability, and the imperative to protect America’s forests and biodiversity 
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Hyundai Motor North America appoints head of commercial vehicle and hydrogen business development

Jim Park will be responsible for Hyundai’s hydrogen initiatives in North America, which includes commercial vehicle sales, infrastructure development, commercialization of hydrogen, and related future mobility solutions.

Hyundai has hired Jim Park as the senior vice president, commercial vehicle and hydrogen business development, Hyundai Motor North America, effective June 12, according to a news release.

In this new role, Park is responsible for Hyundai’s hydrogen initiatives in North America, which includes commercial vehicle sales, infrastructure development, commercialization of hydrogen, and related future mobility solutions.

Park reports directly to José Muñoz, president and CEO, Hyundai Motor North America and president and Global COO of Hyundai Motor Company, and functionally via dotted-line to Ken Ramirez, executive vice president, head of global commercial vehicle and hydrogen business, Hyundai Motor Company.

“Hyundai is committed to accelerating the development of hydrogen technology as it provides a scalable zero-emissions solution for a variety of applications,” said Muñoz. “Jim’s extensive career in automotive business development will help us build the team and obtain the tools and resources we need to continue our hydrogen expansion in North America.”

Park has more than three decades of experience in the automotive industry with leadership roles at both Harman-Samsung and Chrysler. Prior to joining Hyundai, Park was president of Harman International Korea, where he initiated strategies for its automotive business units and Samsung’s Automotive Electronic Business. He managed and led four divisions including connected car, car audio, consumer electronics and professional solutions, and oversaw respective KPI’s such as sales revenue growth, market share, cost management, compliance, and employee development.

Before joining Harman International, Park was the president and CEO of Global Auto Systems, an advisory and consulting services company he formed in 2000, a role he held until 2018. In nearly two decades, his group of consultants worked with leaders and top decision makers around the world providing in-depth industry insights, product, market knowledge and strategic perspectives. Park also previously served on the Board of Governors for the American Chamber of Commerce in Korea.

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LIFTE H2 acquired by US and Canadian strategics

The US-based operations of LIFTE H2 will become the US subsidiary of a Canadian utility, while its custom Asset Performance Management platform has been acquired by a separate US hydrogen strategic.

The US-based operations and infrastructure solutions of LIFTE H2 will become the US subsidiary of Canada’s Powertech Labs, according to the companies.  

Headquartered in British Columbia, Powertech Labs is a subsidiary of the government-owned BC Hydro.

Separately, the company’s digital Asset Performance Management platform has been acquired by Massachusetts-based Electric Hydrogen.

Resource reported in April that Energy & Industrial Advisory Partners had been hired to help LIFTE H2 conduct a Series A.

Powertech USA, the new subsidiary, will serve the US and Canadian markets.

“Powertech USA will provide a family of infrastructure solutions including hydrogen export systems, high-capacity transport trailers, mobile refuelers, and fueling stations,” a post on LinkedIn states. “Together, these solutions form the market’s first end-to-end hydrogen fueling solution – integrating the movement of hydrogen from the production outlet to the vehicle inlet.”

Powertech USA will be led by Angie Ackroyd, LIFTE’s co-founder and chief technology officer, according to Lifte’s website. Jeremy Maunus, LIFTE’s COO, along with Matthew Blieske, LIFTE’s CEO, will continue to support the Powertech USA team in advisory roles.
The post describes the management platform as a synchronized workspace designed to manage hydrogen data, assets, and people. 

LIFTE H2 will continue operations in Europe. The company has offices in Berlin.

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Exclusive: Biomethane firm planning funding round

A biomethane solutions provider with projects in Europe and the US is planning a fifth round of funding to launch early next year, with a need to raise additional project debt.

Electrochaea, the US- and Europe-based biomethane developer, will go to market in 1Q24 for a new round of equity funding, with a near term need for project debt as well, two executives told ReSource.

The company, which was spun out from an incubator at The University of Chicago with offices in Denmark, has projects in Denmark, Colorado, New York and Switzerland. It is backed by Baker Hughes and, from early fundraising efforts, Munich Venture Partners, senior director Aafko Scheringa said. The former investor participated in its most recent (fourth) $40m funding round.

Electrochaea uses a patented biocatalyst that converts green hydrogen and carbon dioxide into BioCat Methane, a pipeline-grade renewable gas.

The average size of a project is roughly $25m, Scheringa said.

Funds from the next round will provide three years of working capital, CEO Mitch Hein added.

Electrochaea has not worked with a financial advisor to date, Hein said, adding that he may have need for one for new processes but has not engaged with anyone.

Scheringa said he is working to achieve commercialization on a pipeline of projects, with a 10 MWe bio-methanation plant in Denmark being farthest along with a mandatory start date before 2026.

Electrochaea has a bio-methanation reactor system in partnership with SoCalGas at the US Department of Energy’s National Renewable Energy Laboratory (NREL) Energy System Integration Facility in Golden, Colorado, though Hein said a project in New York is as advanced in its development.

Bio-methane can be burned in place of natural gas with no systems degradation issues, so gas offtakers are a natural fit for Electrochaea, Scheringa said. Cheap clean electricity paired with available CO2 is critical, so the company will look to places like Texas, Spain, Scandinavia, Quebec and the “corn states” of the US Midwest, for new projects.

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Midstream hydrogen firm to seek capital for projects within one year

The first slate of the company’s salt cavern hydrogen storage and pipeline projects will likely reach FID within six to 12 months, setting the stage for a series of project finance and tax equity transactions.

NeuVentus, the newly formed midstream infrastructure and hydrogen storage company backed by Lotus Infrastructure Partners, will likely seek project financing and tax equity for its first cache of projects in the Gulf Coast region of Texas and Louisiana in six to 12 months, CEO Sam Porter said in an interview.

“It sure looks like 45V and 45Q, and basically everything the IRA just did, is like a brick on the accelerator,” Porter said, explaining that he expects additional federal clarifications for hydrogen to come this year. “We’re looking at FIDing a first batch of projects, which I think are really going to marry up some things that the project finance community loves.”

That includes salt cavern storage and pipelines with a novel ESG twist, Porter said. The company plans to own and operate its developments as a platform. If in time demand for projects becomes overwhelming, the equity holders could sell those projects.

NeuVentus recently launched with Lotus’ backing. The private equity firm’s position is that they are able and ready to fund all project- and platform-level equity, Porter said.

“There’s certainly project level finance requirements, debt, tax equity and sponsor equity,” Porter said. The company will first get its projects de-risked as much as possible.

Pickering Energy Partners was mandated for NeuVentus’ seed raise. Porter said there could be additional opportunities for financial advisors to participate in fundraising, though Lotus has significant in-house capabilities and relationships.

Vinson & Elkins served as the law firm advising Lotus Infrastructure, formerly Starwood Energy, on the launch of NeuVentus.

The company is also open to acquiring abandoned or underutilized infrastructure assets, convertible to hydrogen, Porter said. Assets that connect production and consumption that can be more resistant to embrittlement than newer midstream infrastructure and would be of interest.

Exiting assets in regions that are good for hydrogen production, namely those that are sunny and windy, and are relatively close to consumption, will get the closest look.

Oil & gas in the energy transition

Renewable-sourced hydrogen offers an opportunity for traditional oil and gas operators to continue their work in salt domes.

NeuVentus’ plan is to focus on storage first, and then have the pipeline emanate from that, Porter said. The founding team of the company has a lot of experience in oil & gas and structuring land deals (mineral rights and surface/storage rights) in the Gulf region, where salt caverns are abundant.

The company is also open to an anchor tenant that needs a pipeline segment between production and consumption. But from a developers’ perspective the most prudent play will be around storage sites located with multiple interconnection options, he said.

There are roughly 1,500 miles of pipeline and 9 to 10 million kilograms of daily hydrogen production and consumption in the Texas and Louisiana Gulf region, Porter said.

“I think we’re going to see a significant need for more midstream build-out,” he said. “The traditional fee-for-service model is going to be appealing to a lot of the new entrants.”

A molecule-agnostic approach

Hydrogen is “a Swiss army knife” of a feedstock for numerous use cases, Porter said. That all of those use cases will prevail is uncertain, but NeuVentus ultimately only needs one or two of them to grow.

“Additional hydrogen infrastructure is going to be required,” whether it’s for ammonia as fertilizer or methanol as fuel or something else, Porter said. “We don’t necessarily care: all of them are going to require clean hydrogen.”

Equity owners in NueVentus will be opportunistic when it comes to an eventual financial exit, Porter said.

“The beauty of this is that I can see a number of potential buyers,” he said.

An offtaker that wants to vertically integrate, like foreign consumers of hydrogen products, could want to acquire a midstream platform for purposes of national energy security. Industrial gas companies could want to acquire the infrastructure as well. Large energy transfer companies that move molecules are obvious acquirers as well, and finally the company could remain independent or list publicly under its own business plan.

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US clean fuels producer prepping equity and debt raises

A Texas-based clean fuels producer is close to mandating an advisor for a platform equity raise. It has already tapped Goldman Sachs to help arrange a cap stack in the billions for a project in Oregon.

NXTClean Fuels, a Houston-based developer of clean fuels projects, is preparing a $50m to $100m platform equity raise in the near term and has large debt and equity needs for a pair of projects in Oregon, CEO Chris Efird said in an interview.

The company is close to engaging a new financial advisor for the raise, which will launch late this year or early next, Efird said.

Port Westward

Meanwhile, Goldman Sachs’ post-carbon group is retained for the capital stack on NXTClean’s flagship project at Port Westward, at the Port of Columbia County, Efird said. The $3bn CapEx (including EPC) project is fully permitted by the State of Oregon and is awaiting one federal Clean Water Act permit. An Environmental Impact Statement is expected this fall.

The project is dedicated to producing a split of renewable diesel and SAF, amounting to roughly 50,000 barrels per day total permitted capacity when fully operational.

FID is expected for roughly August 2024, he said. About 30 months from FID the plant will reach COD.

“What we’re most focused on right now is the true senior debt,” Efird said. On the equity side the company is engaged with strategic partners that have indicated interest in post-FID equity.

NXTClean has conversations ongoing with the Department of Energy’s Loan Programs Office, along with commercial project finance lenders.

Red Rock

In April NXTClean acquired what was the Red Rock Biofuel facility in Lakeview, Oregon. That woody biomass-to-SAF facility foreclosed after $425m in investment, following technical and financial issues brought on by the COVID 19 pandemic. NXTClean purchased the facility for $75m in preferred stock at auction on the courthouse steps.

GLC advisors was retained by lead bondholder Foundation Credit to advise on that process, Efird said.

Red Rock is being repurposed to produce carbon-negative RNG for the adjacent Tallgrass Ruby Pipeline, Efird said. The fully-permitted project has a significant amount of equipment already installed or on skids.

A first phase will require a spend of $100m to $150m. Some $50m of equity will augment a balance of debt, raised in part through USDA programming, Efird said. Cash flow from the first phase will help with the second phase, which will bring the capital needs of the facility up to as much as $400m.

Looking forward

Geographically, NXTClean will expand in the Pacific Northwest and British Columbia, Efird said.

Each of NXTClean’s two projects are held by a separate subsidiary. The company has a third subsidiary called GoLo Biomass that focuses on feedstock aggregation, Efird said. It engages with fish processors in Vietnam and used cooking oil suppliers in South Korea to augment supply from large companies.

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