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Exclusive: Renewable fuels firm hires advisor for topco raise

A renewable fuels firm with operations in California has hired a bulge bracket bank to raise project and platform capital for new developments in the Gulf Coast.

Oberon Fuels, a California-based renewable fuels developer, has hired Morgan Stanley for a topco and project capital raise to launch soon, CEO Rebecca Bordreaux said in an interview.

The company, backed by Suburban Propane, plans to reach COD on its next facility in the Gulf Coast in 2026, Boudreaux said. Late last year the company hired its first CFO Ann Anthony and COO Derek Winkel.

Oberon produces rDME at its Maverick Innovation Center in Brawley, California and recently established a partnership with DCC Fuels focused on Europe.

The location of the Gulf Coast facility is not public, Bordreaux said, though the company aims to reach FID on it this year. When operational it would produce 45,000 mtpy of methanol, or a comparative amount of rDME. Capex on the facility is in the range of $200m.

The company is shifting toward production of methanol as a shipping fuel, she said. New opportunities also include using DME as a renewable hydrogen carrier, as the fuel is easily transportable and compatible with many existing logistical networks.

Oberon is also preparing to issue $100m of municipal bonds from the state of Texas, Bordreaux said.

More than $50m has been raised by the company to date, with Suburban Propane being the largest investor and customer in California, Bordreaux said. The company has a third project in the pre-FEED phase.

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Ammonia future trades

The 5,000-tonne futures contract was traded at $385/t for May delivery and cleared through ICE, helping to enable development of an ammonia forward curve.

Global energy and commodity price reporting agency Argus said today that the first-ever futures ICE Ammonia Outright – Argus Ammonia NWE CFR Future contract has traded between counterparties in a deal brokered by Freight Investor Services (FIS).

The 5,000-tonne futures contract was traded at $385/t for May delivery and cleared through ICE.

Ammonia has historically been used as a feedstock for the global fertilizer industry, but its potential as a clean fuel of the future could see its importance grow as the world experiments with more sustainable energy sources. There is interest from both power generation and marine fuels markets, both of whom see potential in low-carbon ammonia as an energy source.

The first step in this process is trading ammonia futures based on the current market, which enables an ammonia forward curve to be developed that will provide the basis for more sustainable low-carbon ammonia investment decisions. Grey ammonia futures can act as a base contract to price future blue and green ammonia trading, or as a basis to wherever that green or blue ammonia is geographically located.

CEO of FIS, John Banaszkiewicz, said: “This is an important trade for many sectors, beyond shipping and fertilizers. ICE’s ammonia contract will be a cornerstone of price discovery and risk management as ammonia is unquestionably one of the most important fuels in our energy transition to a cleaner future. We are delighted to play our small part in helping this market develop.”

Jeff Barbuto, global head of oil markets at ICE, said: “Ammonia’s potential as an alternative fuel source continues to develop as new technologies and markets evolve. We’re excited to work with our customers to further build out the market and this contract alongside ICE’s vast suite of energy derivatives and risk management tools.”

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Pattern Energy: Offtakers increasingly want equity in projects

Ammonia and hydrogen offtakers are increasingly interested in taking equity stakes as a way of understanding the complex dynamics of the projects they will be offtaking from.

Potential offtakers of ammonia and hydrogen around the world want to take equity stakes in the projects that they will be offtaking from, Erika Taugher of Pattern Energy said last week.

The offtakers – fertilizer and industrial firms, commodities traders, and power conglomerates, mostly in Japan – are seeking to take equity ownership as a means of understanding the novel complexities involved in building first-of-kind projects, said Taugher, a director of green fuels at Pattern.

While initial conversations for offtake for Pattern’s projects involved more standard 10 to 20 year contracts, the negotiations have evolved to include equity stakes.

“All the conversations I’m having with these offtakers – they’re now interested in equity in the project,” she said. “I think that’s interesting to note because there’s so much uncertainty that these offtakers really want to get an inside view on where the money is going, how it’s being spent. They want to collaborate with us on the model. They want to know how many ships we’re sending to Europe a month.”

Pattern, which is owned by CPP Investments, is involved with the Port of Corpus Christi hydrogen hub, and is aiming to bring hydrogen from West Texas to Corpus Christi. The company is planning to export ammonia in the near term until hydrogen transport infrastructure is more mature, Taugher added.

Taugher detailed the main challenges for securing offtake for projects, including pending policy issues, questions about financeability, and logistics.

Pattern and its partners are collaborating with a company that is building a 500-mile pipeline from West Texas to the Gulf, she said. Shared infrastructure with other large players at the Port of Corpus Christi helps to keep costs down.

The company is nearing a deal for offtake, and is openly sharing project information with various potential counterparties, she said, “one of which the exclusivity period ends and we go right into negotiations on the offtake contract before the end of the year.”

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Ares acquires RNG developer

Ares Management has made a strategic investment in Arlington, Virginia-based Burnham RNG.

Ares Management’s Infrastructure Opportunities strategy has made a strategic investment to acquire Burnham RNG, from Edge Natural Resources

Burnham is a full-service developer and owner of organic waste management and anaerobic digestion biogas assets across the US.

The investment from Ares, which has approximately $15.1bn in infrastructure equity and debt assets under management as of September 30, 2023, will support Burnham in the further development and construction of its broader pipeline of renewable natural gas assets.

The acquisition of Burnham follows Ares’ announcement of a strategic investment in Dynamic Renewables earlier this year and represents the group’s continued commitment to building scale in the waste-to-value space, supported by the development of strong projects diversified across feedstock type.

Founded in 2021, Burnham is a leading fully integrated origination, development, financing and asset management platform that provides waste recovery solutions focused on the wastewater and agricultural waste industries. The company is the developer and owner of the Pasco Resource Recovery Center (PRRC) located in Pasco, Washington.

PRRC is designed to treat an average of 4.4 million gallons of industrial wastewater sourced from six local food processors per day via anaerobic digestion and supplementary nitrogen reduction systems. After completion, the facility is expected to produce treated water for irrigation, as well as ~900 MMBtu/day of renewable natural gas. The asset has a 30-year wastewater treatment agreement with the City of Pasco and will sell produced RNG to Cascade Energy via a 20-year offtake agreement. In addition to PRRC, Burnham has a development pipeline comprised of several waste-to-biogas projects across the U.S.

Burnham is led by its Founder and Chief Executive Officer Chris Tynan, who has over two decades of experience in financing and developing infrastructure projects.

Akin Gump Strauss Hauer & Feld LLP served as legal counsel to Edge. Latham & Watkins LLP served as legal counsel to Ares.

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Exclusive: Glenfarne exploring hydrogen projects on existing asset base

Glenfarne Energy Transition is advancing its flagship liquefied natural gas project, Texas LNG, and evaluating hydrogen projects on or near its existing asset base on the Gulf Coast.

The Biden administration’s pause on permits for new US liquefied natural gas facilities hasn’t hurt all unbuilt projects.

Glenfarne Energy Transition, a subsidiary of Glenfarne Group, is moving ahead with its fully permitted lower-carbon flagship LNG export facility, Texas LNG, as the project is now set up to be the only such US project to reach FID this year.

Texas LNG, a 4 million MTPA facility proposed for Brownsville, Texas, will be the lowest carbon emitting LNG facility approved in the US, largely due to its use of electric motors in refrigerated compression. 

As designed, the plant would emit .15 metric tons of CO2e per ton of LNG produced, placing it slightly lower than the much larger Freeport LNG facility, which also has electric motors and emits around .17 metric tons of CO2 per ton of LNG.

The carbon intensity measurement counts emissions at the Texas LNG plant only, and not related emissions from the electric grid, which is why Glenfarne is seeking to source power for the project from wind and solar generation in south Texas, Adam Prestidge, senior vice president at Glenfarne, said in an interview.

In fact, the lower carbon aspects of Texas LNG helps with every element of the project, Prestidge said, including conversations with European offtakers and potential debt investors.

“Having a focus on sustainability is table stakes for every conversation,” he added. “It’s the finance side, it’s the offtake side, it’s our conversations with regulatory agencies.”

LNG pause

Glenfarne is seeking to raise up to $5bn of equity and debt for the project, according to news reports, a process that could benefit from the Biden administration’s pause on issuing permits for LNG projects that export to countries without free-trade agreements with the US.

“Our confidence and our timetable for that has probably been accelerated and cemented by the fact we are fully permitted, despite the Biden LNG pause impacting the broader market,” Prestidge said.

“The market has pretty quickly recognized that if you want to invest in LNG or buy LNG from a project that’s going to FID in 2024, you really don’t have very many fully permitted options right now.”

Glenfarne’s other US LNG project, called Magnolia LNG, has not yet received the required federal approvals and is therefore on pause along with a handful of other projects.

For Magnolia, Glenfarne is proposing to use a technology for which it owns the patent: optimized single mixed refrigerant, or OSMR, which uses ammonia instead of propane for cooling, resulting in less feed gas needed to run the facility and thus about 30% lower emissions than the average gas-powered LNG facility, Prestidge said.

Hydrogen projects

Glenfarne Energy Transition last year announced the formation of its hydrogen initiative, saying that projects in Chile, Texas, and Louisiana would eventually produce 1,500 kilotons of ammonia. 

“We’ve got existing infrastructure in the US Gulf Coast, and in Chile. A lot of the infrastructure required to produce LNG is similar or can be easily adapted to the infrastructure needed to produce ammonia,” Prestidge said. “And so, we’ve looked at locating hydrogen and ammonia production at sites in or near the ports of Brownsville and Lake Charles,” where Texas LNG and Magnolia LNG are located, respectively.

“The familiarity with the sites and the infrastructure and the local elements, make those pretty good fits for us,” he added.

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exclusive

New clean fuels firm takes first external financing

A clean fuels startup aiming to provide turnkey decarbonization solutions will be in the market for additional capital shortly.

Elemental Clean Fuels has closed on its first round of external financing from investors Piney Point Capital and Fusion Fuel Green plc, according to a company spokesperson.

The money will be used to build out the company’s pipeline and add new projects, which it plans to develop, own and operate. Clean fuels would be produced from renewables via electrolysis, followed by storage and transportation solutions, according to the company’s website.

Capital investment provided by Piney Point will be utilized by ECF to further develop its existing decarbonization portfolio in North America, as well as to expand its internal capabilities and add additional project assets (including the projects contributed by Fusion Fuel), according to a news release.

ECF is a business venture of CEO Zach Steele and CFO Jason Baran, former executives of Fusion Fuel who have executed and managed over $3bn in development projects in North America. They are joined by CDO Jeff Crone, a former vice president of engineering and construction services at Buckeye Partners.

In parallel, Fusion Fuel has also entered into a strategic technology partnership with Elemental, granting Fusion Fuel the right to bid on all PEM-based green hydrogen projects in Elemental’s North American pipeline for a period of three years, according to a release from Fusion Fuel.

Elemental has approximately 40 MW in pre-feasibility projects within its pipeline and is currently collaborating with Fusion Fuel on a feasibility study for a 2 MW green hydrogen project for a state utility to be delivered in 2024. This partnership will provide Fusion Fuel with exposure to the emerging North American green hydrogen market, whilst enabling the company to focus its near-term commercial efforts on the Iberian Peninsula and Northern Europe.

“We are extremely excited to have Piney Point as a partner as we progress our mission to drive growth in the emerging clean fuels market,” said Steele. “With investments in a broad range of companies across the energy transition, they are uniquely positioned to provide strategic partnerships and additional access across the value chain to drive scale.  Piney Point’s investment and expertise will accelerate the growth of our Company in the mobility and heavy industry sectors throughout North America.  We are also excited and optimistic about continued collaboration with Fusion Fuel going forward.”

“As investors, Piney Point Capital recognizes the immense potential of ECF in revolutionizing the clean fuel landscape. We believe in the vision and capabilities of the ECF team, and we are committed to supporting their mission to accelerate decarbonization through innovative projects and strategic partnerships across North America,” said Mike Keough, managing partner Piney Point Capital, a subsidiary of Racon Capital.

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exclusive

Waste-to-energy company interviewing advisors for strategic capital raise

Vancouver-based Klean Industries plans to run a process to raise between $250m – $500m of capital to deploy into projects, some of which would use green hydrogen to upgrade recovered fuel and pyrolysis oils.

Waste-to-energy specialist Klean Industries is interviewing financial advisors and planning to run a process to find investors for a strategic capital raise.

The Vancouver-based company is seeking to raise between $250m – $500m in a minority stake sale that would value the company around $1bn, Klean CEO Jesse Klinkhamer said in an interview.

Klean had previously intended to list on the NASDAQ exchange but those plans were nixed due to the COVID-19 pandemic, he said. The company still plans to list publicly in 2024 or 2025.

Proceeds from a capital raise now would be used to “rapidly deploy” into the projects that Klean is advancing around the globe, Klinkhamer said.

For one of those projects – a flagship tire pyrolysis plant in Boardman, Oregon – Klean is raising non-recourse debt to finance construction, the executive said. Klinkhammer declined to name the advisor for the project financing but said news would be out soon and added that the company has aligned itself with infrastructure funds willing to provide non-recourse debt for the facility.

The Boardman project, which is expected to cost roughly $135m, is an expansion of an existing site where Klean will use its advanced thermal conversion technology to recover fuel oil, steel, and refined carbon black from recycled tires. The end products are comparable to virgin commodities with the exception of being more cost-effective with a lower carbon footprint.

“A lot of what we do is of paramount interest to a lot of the ESG-focused infrastructure investors that are focused on assets that tick all the boxes,” Klinkhamer said, noting the consistent output of the waste-to-energy plants that Klean is building along with predictable prices for energy sourced from renewable power.

Klean has also partnered with H2Core Systems, a maker of containerized green hydrogen production plants, and Enapter, an electrolyzer manufacturer. The company will install a 1 MW electrolyzer unit at the Boardman facility, with the green hydrogen used to upgrade recovered fuel oil and pyrolysis oil into e-fuels that meet California’s Low Carbon Fuels Standards.

“We were exploring how we could improve the quality of the tire pyrolysis oil so that it could enter the LCFS market in California,” he said, “because there are significant carbon credits and tax incentives associated with the improved product.”

The company received proposals from industrial gas companies to bring hydrogen to the Boardman facility that were not feasible, and Klean opted for producing electrolytic hydrogen on site in part due to the abundance of low-cost hydroelectric power and water from the nearby Columbia River.

Addressable market

Discussing Klean’s addressable market for waste-to-energy projects, Klinkhamer points to Japan as an example of a comparable “mature” market.

Japan, an island nation of 126 million people, has built roughly 5,000 resource recovery, waste-to-energy plants of various scopes and designations, he notes. For comparison, the United Kingdom – another island nation of 67 million people – has just 20 waste-to-energy plants.

“The opportunity for waste-to-energy in the UK alone is mind boggling,” he said. “There are a thousand opportunities of scope and scale. Nevermind you’ve got an aging, outdated electrical infrastructure, limited landfills, landfill taxes rising – a tsunami of issues, plus the ESG advent.”

A similar opportunity exists in North America, he noted, where there are around 100 waste-to-energy plants for 580 million people. The company is working on additional tire, plastic, and waste-to-energy projects in North America, and also has projects in Australia and Europe.

Hydrogen could be the key to advancing more projects: waste-to-energy plants have typically been hamstrung by a reliance on large utilities to convert energy generated from waste into electricity, which is in turn dependent on transmission. But the plants could instead produce hydrogen, which can be more easily and cost effectively distributed, Klinkhamer said.

“There is now an opportunity to build these same plants, but rather than rely on the electrical side of things where you’re dealing with a utility, to convert that energy into hydrogen and distribute it to the marketplace,” he added.

Hydrogen infrastructure

Klinkhamer says the company is also examining options for participating in a network of companies that could transform the logistics for bringing feedstock to the Boardman facility and taking away the resulting products.

The company has engaged in talks with long-haul truckers as well as refining companies and industrial gas providers about creating a network of hydrogen hubs – akin to a “Tesla network” – that would support transportation logistics.

“It made sense for us to look at opportunities for moving our feedstock via hydrogen-powered vehicles, and also have refueling stations and hydrogen production plants that we build in North America,” he said.

Klean would need seven to 12 different hubs to supply its transportation network, Klinkhamer estimates, while the $350m price tag for the infrastructure stems from the geographic reach of the hubs as well as the sheer volume of hydrogen required for fueling needs.

“With the Inflation Reduction Act, the U.S. has set itself up to be the lowest-cost producer of hydrogen in the world, which will really spur the development of hydrogen logistics for getting hydrogen out,” he said. “And to get to scale, it’s going to require some big investments.”

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