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Exclusive: Northeastern offshore wind sale kicks off

A major European energy firm has retained a banker and launched a process to sell a large portfolio of offshore wind developments in the northeastern US.

Ocean Wind I & II, Orsted’s offshore wind developments in New Jersey amounting to 2.5 GW of capacity, are for sale via an auction, according to two sources familiar with the matter.

Jefferies is the exclusive financial advisor on the sale, which is codenamed Project Hummer, the sources said. The process launched this month.

Denmark-based Orsted had previously halted development of Ocean Wind I and II as impairments on the projects climbed above $5bn. And the sale process comes amid the firm’s broader pullback from the offshore wind sector.

In an earnings call this month, Orsted CEO Mads Nipper said the company had plans to sell up to DKK 115bn (USD 16.6bn) in assets by 2030 as it accelerates divestments to boost its balance sheet.

Orsted also said it would withdraw from offshore wind markets in Norway, Spain and Portugal and cut its target for 2030 installed renewable capacity from 50 GW to 35 – 38 GW.

The company has a preference for a new owner acquiring 100% of both Ocean Wind leases and all associated development assets, the sources said.

Targeted COD for the two developments is 2029 and 2031, while estimated capex for each is USD 7.1bn (98 turbines) and USD 7.7bn (82 turbines), respectively.

New Jersey has accelerated offshore wind solicitation schedules and has recently awarded two contracts for 2.4 GW at $112.50/MWh and 1.3 GW at $131.00/MWh compared to the $98.10/MWh for Ocean Wind I and $84.03/MWh for Ocean Wind II awarded back in 2019 and 2021.

Orsted and Jefferies did not respond to requests for comment.

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OCOChem raises $5m seed round

The Washington-based startup has partnered with investor INPEX to evaluate collaboration opportunities on the transportation of CO2 and clean hydrogen.

Carbon conversion startup OCOchem has raised $5m in Seed funding from lead investor TO VC, according to a news release.

Japan’s INPEX Corp., the LCY Lee Family Office, and MIH Capital Management also participated in the round. They join Halliburton Labs, Halliburton Company’s energy and climate tech accelerator, which has been supporting OCOChem since 2021.

The Richland, Wash.-based company is commercializing a way to make highly versatile carbon-neutral platform molecules by electrochemically converting recycled CO2, water and clean electricity into formic acid and formate chemicals, for use in agricultural and industrial applications.

“Using renewable energy, OCOChem’s technology enables the conversion of water and carbon dioxide into formic acid, which is stable under ambient conditions.” The release states. “The formic acid can also be converted to useful carbon and hydrogen components with minimal energy input.”

In addition to investing in the company, INPEX, Japan’s largest oil and gas production company, has partnered with OCOchem to evaluate collaboration opportunities leveraging the company’s technology to transport CO2 and clean hydrogen.

OCOchem will use the new funds to scale its modular carbon conversion technology to industrial proportions and build a pilot plant for commercial demonstration operations.

“Using OCOchem technology and clean electricity, we can now do what plants and trees have been able to do for billions of years — convert CO2 and water into useful organic molecules using clean energy. But unlike photosynthesis, we can do it faster and more efficiently at a lower cost, using much less land,” said Todd Brix, co-founder and CEO of OCOchem, in the news release.

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SoCalGas and Bloom Energy powering Caltech with hydrogen project

The project will inject hydrogen into natural gas infrastructure and be converted into electricity using fuel cells.

Southern California Gas Company and Bloom Energy will power a portion of Caltech’s grid with an innovative hydrogen project that demonstrates how hydrogen could potentially offer a strong solution for long-duration clean energy storage and dispatchable power generation, according to a news release.

This project takes water from Caltech’s service line and runs it through Bloom Energy’s solid oxide electrolyzer, which uses grid energy to create hydrogen. The resulting hydrogen is injected into Caltech’s natural gas infrastructure upstream of Bloom Energy fuel cells, creating up to a 20% blend of hydrogen and natural gas. All of this fuel blend is then converted into electricity with Bloom Energy’s fuel cells, and the electricity is then distributed for use on campus.

Blending hydrogen into natural gas infrastructure statewide – which could help reduce dependence on fossil fuels and ultimately drive down hydrogen costs by scaling production – first requires developing a hydrogen injection standard. The global hydrogen economy is projected to potentially produce as much as 80 gigatons of carbon abatement by 2050, which represents approximately 11% of required cumulative emissions reductions.

SoCalGas is working to help develop a state hydrogen blending standard by proposing pilot projects for approval by the CPUC. These projects could help to better understand how clean fuels like clean renewable hydrogen could be delivered through California’s natural gas system.

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Centrica and Equinor exploring development of UK hydrogen hub

Centrica is also advancing plans to convert its Rough offshore gas storage facility off England’s coat for hydrogen storage.

Centrica and Equinor have signed a cooperation agreement to explore developing a low-carbon hydrogen production hub at Easington in East Yorkshire, according to a press release.

The Centrica-operated area at Easington could transition to a low carbon hydrogen production hub over the coming decade. Currently up to one third of the UK’s total gas supply enters via Easington, much of it from Equinor’s Norwegian facilities. Easington is also situated close to large offshore wind farms.

The area is also earmarked as a landing point for the East Coast Cluster’s carbon capture pipeline, which would transport CO2 for storage deep under the seabed. It is a key location within the Zero Carbon Humber partnership which is planned to provide regional hydrogen and CO2 pipelines between the area’s major energy producers and carbon intensive industries.

Centrica is also advancing plans to convert its Rough offshore gas storage facility for hydrogen storage as part of its transition to a net zero future.

The UK government recently doubled its 2030 hydrogen production ambition to 10GW capacity, with at least half coming from electrolytic ‘green’ hydrogen. Equinor has ambitions to deliver nearly one fifth of this national target by generating 1.8 GW of hydrogen production within the Humber region by 2028, beginning with its flagship H2H Saltend project.

Centrica and Equinor expect that the conversion of the Easington Terminal could produce an additional 1GW of low carbon hydrogen production coupled with the around 200MW off-taker demand.

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exclusive

AIMCo-backed midstream infrastructure firm in refi

The company, whose asset footprint includes Gulf Coast hydrogen production, today priced a debt refinancing transaction with an 8.875% coupon.

Howard Energy Partners today priced $550m of senior unsecured notes to refinance amounts outstanding on its revolving credit facility.

The company, which is majority owned by the Alberta Investment Management Corporation (AIMCo), will pay 8.875% on the notes, inside of price talk of between 8.75% – 9%, according to sources familiar with the matter.

RBC Capital Markets and TD Securities are joint active bookrunners on the deal, the sources said.

Howard in 2021 closed on the acquisition of the Javelina Facility in Corpus Christi, Texas — a treating and fractionation plant that extracts olefins, hydrogen, and natural gas liquids from the gas streams produced by local refineries.

Starting in Jan of 2023, a strategic technology partner began producing a low-carbon diesel substitute using Javelina’s hydrogen and CO2 as feedstocks, making it one of the first merchant “clean” hydrogen facilities on the US Gulf Coast, according to the company. HEP is also pursuing carbon capture and sequestration opportunities with its Javelina assets through a joint venture with TALOS Energy and the Port of Corpus Christi.

AIMCo acquired an initial 28% stake in HEP in 2017, and brought its ownership stake to 87% last year following the purchase of Astatine Investment Partners’ stake in the company.

Howard operates in two key segments in the US and Mexico: natural gas and liquids. The natural gas segment includes 1,175 miles of pipelines and approximately 4.3 Bcf/d of throughput capacity and 600 MMCf/d of cryogenic processing capacity.

The liquids segment includes terminalling and logistics services for refined products as well as refinery-focused off-gas handling, treating, processing, fractionation and hydrogen supply services.

Spokespersons for the company, RBC, and TD did not respond to emails seeking comment.

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Exclusive: OCI Global exploring ammonia and methanol asset sales

Global ammonia and methanol producer OCI Global is working with an investment bank to explore a sale of ammonia and methanol assets as part of the re-opening of its strategic business review.

OCI Global is evaluating a sale of several ammonia and methanol assets as part of the re-opening of its strategic business review.

The global producer and distributor of methanol and ammonia is working with Morgan Stanley to explore a sale of its ammonia production facility in Beaumont, Texas, as well as the co-located blue ammonia project under development, according to sources familiar with the matter.

The evaluation also includes OCI’s methanol business, one of the sources said.

Representatives of OCI and Morgan Stanley did not respond to requests for comment.

As part of the earlier strategic review announced last year, OCI in December announced the divestiture of its 50% stake in Fertiglobe to ADNOC, and the sale of its Iowa Fertilizer Company to Koch Industries, bringing in $6.2bn in total net proceeds.

However, OCI has received additional inbound inquiries from potential acquirers for the remaining business, leading it to re-open the review, CEO Ahmed El-Hoshy said last month on OCI’s 4Q23 earnings call.

“As such, OCI is exploring further value creative strategic actions across the portfolio, including the previously announced equity participation in its Texas blue clean ammonia project,” he said, adding: “All options are on the table.”

The comments echoed the remarks of Nassef Sawiris, a 40% shareholder of OCI, who recently told the Financial Times that OCI could sell off most of its assets and become a shell for acquisitions.

In the earnings presentation, El-Hoshy took time to lay out the remaining pieces of the business: in particular, OCI’s 350 ktpa ammonia facility in Beaumont; OCI Methanol Group, encompassing 2 million tons of production capacity in the US and a shuttered Dutch methanol plant; and its European ammonia/nitrogen assets.

Texas blue

The Texas blue ammonia project is a 1.1 million-tons-per-year facility that OCI touts as the only greenfield blue ammonia project to reach FID to date. The company has invested $500m in the project as of February 24, out of a total $1bn expected investment, according to a presentation.

“Commercial discussions for long-term product offtake and equity investments in the project are at advanced stages with multiple parties,” El-Hoshy said. “This reflects the very strong commercial interest and increasing appetite from the strategics to pay a price premium to secure long-term low-carbon ammonia.”

El-Hoshy’s comments highlight the fact that, unlike most projects in development, OCI took FID on the Texas blue facility without an offtake agreement in place. The executive did, however, highlight the first-mover cost advantages from breaking ground on the project early and avoiding construction cost inflation.

Additionally, the project was designed to accommodate a second 1.1 mtpa blue ammonia production line, which would be easier to build given existing utilities and infrastructure, El-Hoshy said, allowing for an opportunity to capitalize on additional clean ammonia demand at low development costs.

“Line 2 probably has the biggest advantage, we think, in North America in terms of building a plant where a lot of the existing outside the battery limits items and utilities are already in place,” he said, emphasizing that by moving early on the first phase, they avoided some of the inflationary EPC pressures of recent years. 

At the facility OCI will buy clean hydrogen and nitrogen over the fence from Linde, and Linde, in turn, will capture and sequester CO2 via an agreement with ExxonMobil.

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exclusive

Green hydrogen firm secures offtake LOI for Texas project

Clean Energy Holdings has secured an LOI for offtake from a European buyer for phase 1 of a green hydrogen project currently under development in Texas.

Clean Energy Holdings (CEH), a green hydrogen firm, has secured offtake for phase 1 of a green hydrogen project currently under development in Clear Fork, Texas.

A critical component of the project’s progress, the letter of intent for hydrogen offtake was signed this week with a European buyer, CEH chief executive Nicholas Bair said in an interview. He declined to name the offtaker but described it as a national energy security issue for the buyer.

The offtake agreement covers the first 30,000 kg per day of production from the site starting in 4Q24, which encapsulates phase 1 of the project. CEH President Cornelius Fitzgerald said the facility will eventually ramp up in four phases to around 130,000 kg per day of production.

CEH, which develops but also plans to own and operate projects, has assembled a coalition of industry partners, which it calls The Alliance, to provide “soup-to-nuts delivery,” Bair said. “We oversee projects from the first day to the last day the lights are on and the last use of each molecule.”

He added: “In the energy transformation, availability, security, and reliability matter.”

In addition to CEH, the group includes Bair Energy, Chart Industries, Equix, RockeTruck, Coast 2 Coast Logistics, The Eastman Group, and, most recently, HSB.

Bair emphasized the importance of the recent $4.4bn merger announcement between Chart Industries and Howden for its impact on vertical integration for CEH’s projects. Chart and Howden said in a press release last week that the merger will expand Chart’s equipment portfolio and process technology offering for multiple molecules and applications across high growth areas, including hydrogen.

“The acquisition gives CEH high confidence in security of supply from the Chart scope, and when paired with Chart’s performance history and customer centric experience, we believe Chart has increased its important position for our platform and our industry in general,” Fitzgerald added.

CEH had already put in a $100m purchase order for equipment with Chart, which is advising The Alliance on liquefaction, storage, reverse osmosis, and water, but the order jumped to $400m in a phased approach over the next 24 – 36 months following the Howden announcement, Bair said.

Project finance

In order to finance the Clear Fork project, CEH is seeking to raise just under $1bn through sponsor equity and project finance debt, using ING as financial advisor, the executives said. The tenor of the debt will likely come in between seven and 10 years, in line with the terms of the offtake agreement.

CEH has received interest from 142 “top notch” investors for the equity piece, and interest from 42 investors that could do both debt and equity, Bair said.

Bair and Fitzgerald declined to discuss pricing for the offtake contract, but noted the terms were “economically responsible” even without factoring in expanded tax credits included in the Inflation Reduction Act. “We meet the hurdle rates of our investors and our bank” without the tax credits, Bair said.

CEH is on a baseline schedule to reach FID on the Clear Fork project by April, 2023, Bair said, and is working with Norton Rose Fulbright as legal counsel.

More projects

Meanwhile, CEH and its partners are seeking to assemble an ambitious pipeline of projects over the next decade, and have held discussions with additional potential offtakers in foreign and domestic markets.

A project announced last year — CEH’s first — seeks to advance a wind-powered green hydrogen plant in Colorado.

With The Alliance, “The amount of intelligence and experience that we’ve had at the table at the early design phase of these projects has been of tremendous value,” Fitzgerald said.

“Once there’s been enough experience and a bit more trust built up within those relationships, now we’re seeing opportunities to start to come from our platform around where an offtake might be needed,” he added, equating it to a development model that “shops backward” from where the molecule is needed.

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