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Exclusive: Waste-to-fuels developer preparing capital raise

A waste-to-fuels developer has lined up an advisor and is planning a capital raise for a project in West Texas, in what is expected to be the first of up to 20 similar fundraising efforts totaling $500m in external capital needs.

Recover, Inc., a Calgary-based waste-to-fuels project developer, is preparing to launch a capital raise for its first US-based projects in West Texas.

The company has lined up CIBC to assist with the capital raise while a large Canadian Crown Corporation is expected to sign on as a lending partner for the debt portion of the cap stack, CFO Shane Kozak said in an interview.

Kozak said he will need to raise $70m – $75m for the West Texas project, which will process waste from oil and gas drilling fluids and recover 800 barrels per day of low carbon intensity diesel fuel from 800 tons of waste.

Existing equity backers Azimuth Capital and BDC will participate in the capital raise, but the company is seeking additional project equity investors to take part in a 60% debt to 40% equity capital structure, Kozak said.

While the cost of the West Texas project is estimated at $55m, the company needs to raise approximately $70m to account for debt servicing and underwriting fees, he added.

Recover has mapped out a strategy to build 20 projects in oil and gas basins across the US, and estimates it will need to raise $500m in external capital over 10 years to fully develop those projects.

Project model

The company already operates a similar facility in Alberta that became operational in 2018, at a cost of CAD 20m and producing about half of what the West Texas project will produce.

“This has been commercially proven in Canada, and we’re going to a better market with a lot more drilling waste production” in the US, Kozak said.

The waste stream from oil and gas drilling contains large amounts of diesel fuel: a typical well will create 400 – 500 tons of waste, 30%-40% of which is recoverable low carbon intensity diesel, Kozak said.

In Texas, the drilling fluid waste often ends up in pits near drilling rigs or in industrial landfills, where it biodegrades over time and emits CO2 and methane into the atmosphere.

“We significantly reduce GHG emissions and create a fuel source that can be reused, and every barrel that we recover is a barrel of fuel that would otherwise have to come from a fossil fuel source,” he said.

Recent changes to Texas policy regarding oil and gas drilling waste could increase the availability of feedstock for the company. The Texas RailRoad Commission, which oversees the state’s oil and gas industry, is seeking to modernize disposal practices that would redirect waste from drilling pits to more centralized industrial landfills.

“The good thing for us is that, in the Permian Basin, about 70% – 80% of the wells use these pits, and our strategy is to build our facility directly on industrial landfills,” Kozak said.

Recover is working with a large landfill management company with operations across the US to develop its facilities, he added. The company does not pay for feedstock, given the synergistic relationship between Recover and the landfill management company.

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Chemours nets approvals for fuel cell membrane manufacturing

A Chemours JV will supply fuel cell and humidifier membranes globally, enabling downstream customers to accelerate conversion to green, hydrogen-powered heavy-duty transportation.

The Chemours Company has obtained the required approvals from the European Commission and the People’s Republic of China State Administration for Market Regulations to launch operations at its joint venture with BWT FUMATECH Mobility GmbH, under the name of THE Mobility F.C. Membranes Company GmbH – A BWT Chemours Company.

FUMATECH BWT GmbH is an established player in multiple hydrogen markets focused on membrane manufacturing in the field of fuel cell technology.

The 50-50 joint venture focuses on integrating the unique capabilities, resources, and technological expertise of each company to elevate and accelerate the capacity to manufacture fuel cell and humidifier membranes for mobility applications for long-term customers. By leveraging the best of each partner’s complementary assets, THE Mobility F.C. Membranes Company GmbH – A BWT Chemours Company will expedite the supply of HDFC membranes to original equipment manufacturers (OEMs), helping to meet the demand for these membranes that are critical to fully scaling the global hydrogen economy.

“Our Nafion ion exchange membranes are playing a critical role in driving the hydrogen economy and helping to create a more sustainable future, ” said Gerardo Familiar, president of Advanced Performance Materials at Chemours. “The technologies and solutions powered by our chemistry enable modern life and support economies across the world. Our joint venture with FUMATECH BWT GmbH and the BWT Group will enable solutions to support the future of clean energy and the transition to

THE Mobility F.C. Membranes Company will supply fuel cell and humidifier membranes globally, enabling downstream customers to accelerate conversion to green, hydrogen-powered heavy-duty transportation, driving green goals and sustainable policy frameworks in the E.U., the U.S. and elsewhere. With regulatory approvals in place the joint venture can now officially begin operation producing fuel cells and humidifier membranes for the mobility market.

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CB&I and Daewoo studying LH2 carrier and storage design

The companies will conduct a feasibility study of a liquid hydrogen carrier including an a storage tank design

CB&I, McDermott’s storage business line, and South Korea’s Daewoo Shipbuilding & Marine Engineering Co. (DSME), have signed a memorandum of understanding (MoU) for a feasibility study of a liquid hydrogen (LH2) carrier including an LH2 storage tank design, according to a news release.

CB&I will evaluate its LH2 storage tank design for ocean-going ships and DSME will investigate and develop the ship’s general design to install the LH2 storage tank. The output of the feasibility study is expected to contribute to the future design of a large-scale LH2 carrier.

CB&I spheres can store LH2 at temperatures of -423 degrees Fahrenheit and the company is nearing completion of the world’s largest LH2 sphere in Cape Canaveral, Florida.

The ability to ship large quantities of hydrogen across the ocean is an increasing need to help countries like South Korea achieve carbon reduction goals in a hydrogen economy.

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Developer inks supply agreement for Kansas CO2 utilization facility

The facility will produce green syngas from CO2 to be used for making products such as hydrogen, synthetic base oils, low-carbon jet fuels, green methanol, and others.

HYCO1, Inc.  announces that it has entered into a 20-year carbon dioxide supply agreement with Kansas Ethanol, located in Lyons, Kansas for the planned construction of the world’s largest biogenic carbon dioxide utilization facility, Green Carbon Synthetics Kansas, LLC.

HYCO1 is a Houston, Texas (USA) based technology company that has created a disruptive CO2 conversion catalyst and related low-cost CO2 process technology. HYCO1 CUBE™ Technology (Carbon Utilization, Best Efficiency) cost-effectively utilizes carbon dioxide and various methane source feedstocks to create low-cost, low-carbon chemical grade syngas in a single pass.

The syngas produced is used to produce low carbon intensity (CI) downstream products.   HYCO1 technology not only lowers the resultant carbon score of the downstream products by 50% to 100% but does so at a competitive cost compared to fossil feedstock derived products and without the requirement of incentives like many other technologies.  HYCO1 technology enables green syngas to be used for making products such as hydrogen, synthetic base oils, low-carbon jet fuels, green methanol, and many others.

The new HYCO1 project to be co-located with Kansas Ethanol will utilize all of their 800 tons per day of CO2 to produce approximately 60 million gallons per year of low-carbon and zero-carbon products.

Kurt Dieker, chief development officer and co-founder of HYCO1, stated, “While there are many paths that an ethanol facility can take to improve sustainability and margins, ranging from additional energy efficiencies to protein separation, in my opinion CO2 utilization represents the leading value-added step for an ethanol production facility.”

The Lyons HYCO1 project is in the engineering stage with plans to complete the pre-construction engineering in 2024. The facility will produce approximately 4,000 barrels per day of first-of-a-kind synthetic Base Lubricating Oils and Low-Carbon Jet Fuel made from CO2. High-performance products include four centistoke base oil for use in the highest grade synthetic motor oils; and a two centistoke base oil currently being tested by EV manufacturers for its ideal battery and drive-train heat transfer and lubrication properties.

The projects’ products are produced with more than 80% reductions in carbon footprints versus traditional fossil-derived products.   Approximately half of the weight of these new sustainable products will consist of biogenic CO2 that would have previously been emitted into the atmosphere.

Mike Chisam, CEO of Kansas Ethanol, said of the project, “Although most ethanol producers are considering or pursuing underground carbon sequestration in our industry to decarbonize, we believe that carbon utilization, which supports a circular carbon economy, represents the best use of our CO2, and positions us more competitively in the market. Value added products made from CO2 that displace fossil derived products represents a win for us at Kansas Ethanol, a win for the U.S. Ethanol Sector, and a win for the global environment. We are looking forward to the construction of the HYCO1-based Green Carbon Synthetics Kansas, LLC facility next to ours. The co-location benefits: carbon dioxide utilization, natural gas offset through waste heat steam production, and additional electricity offsets will position our facility as a world leader of low-carbon ethanol resulting in significant shared savings.” Chisam also noted “HYCO1’s carbon utilization technology enables us to sustainably produce all products, even if, or when, government support incentives are no longer available. That is incredibly important to us.”

HYCO1 is currently evaluating additional project sites and partners to mirror the Green Carbon Synthetics Kansas, LLC project, while also collaborating with downstream technology providers to produce other low-carbon products.

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exclusive

Green hydrogen developer raising capital for projects

Fusion Fuel, a green hydrogen developer based in Portugal, has engaged an advisor and is in talks with investors to raise capital for projects in North America.

Fusion Fuel, a green hydrogen developer based in Portugal, has engaged an advisor and is in talks with investors to raise capital for projects in North America.

The company is working with RBC Capital Markets as financial advisor, Fusion Fuel Co-Head Zachary Steele said in an interview, and expects to produce infrastructure-type returns on its projects.

For its first project in the U.S., Fusion Fuel has agreed to a JV with Electus Energy to build a 75 MW solar-to-hydrogen facility in Bakersfield, California.

The project will produce up to 9,300 tons of green hydrogen per annum including nighttime operation and require an estimated $180m in capital investment, with a final investment decision expected in early 2024 and commissioning in the first half of 2025.

The combination of green hydrogen and solar production incentives along with California’s low carbon fuel standard make the economics of the project attractive, Steele said.

“Hydrogen is selling for up to $15-$18 per kilogram in California in the mobility market, and we can produce it at around the low $3 per kilogram area, so that leaves a lot of room for us to make a return and reduce costs for customers,” he said.

The company sells electrolyzer technology for projects but also serves as a turnkey developer. The technology consists of Hevo-Solar, which utilizes concentrated solar power to create hydrogen; and Hevo-Chain, a centralized PEM electrolyzer powered by external electricity.

Fusion Fuel’s proposition is that its smaller-scale technology – of 25 kW per unit –  is ready to use now, and can be dropped into places like a gas station in New York City, Steele said.

“This allows customers to scale into hydrogen and makes it available on site, compared with the massive projects going up in Eastern Canada or the Gulf Coast that require customers to commit significant capital to underwrite large scale projects,” he added.

Along with Electus, Fusion Fuel has already entered into a land-lease agreement for 320 acres in Kern County, California for the Bakersfield development. Black & Veatch will perform a concept study while Cornerstone Engineering and Headwaters Solutions are also engaged.

Iberian pipeline

The company targets to have EUR 40m of revenues in 2023, with a third of that coming from tech sales and the balance coming from Fusion Fuel-owned development projects.

Its revenue pipeline for next year is focused on the Iberian peninsula, and has been largely de-risked with the company having secured grants, with land and permitting underway.

In addition to the electrolyzer sales, the company, together with its partners, can provide turnkey projects that include engineering, procurement of the balance of plant equipment, construction of the facility, and operations, Steele said on an investor call this week.

“This allows us to not only make returns on the tech sale but also on the overall project and potentially recurring revenue from operations,” he said.

The company plans to use projects it is building in Portugal to expand into other core markets, beginning with a focus on mobility opportunities and targeted industrial decarbonization projects. Starting in 2024 the company plans to extend its reach further into North America and also Italy.

U.S. focus

Similar to other international hydrogen players, the passage of the Inflation Reduction Act caused a strategic shift of focus to the U.S. and accelerated Fusion Fuel’s plans to grow its business there, company executives said.

Notably, since Fusion Fuel will use its own technology in the projects it is seeking to develop, a required amount of that technology will need to be manufactured in the U.S. in order to qualify for the full benefits provided in the IRA.

As such, Fusion Fuel is scouting for a location to build one, or possibly two, manufacturing facilities in the U.S.

“The size of the Bakersfield project alone justifies building a new manufacturing facility,” Steele said on the investor call.

Steele was previously CEO of Cedar LNG, a floating LNG development in British Columbia, prior to exiting to Pembina. He works alongside Fusion Fuels Co-Head & CFO, Frederico Figueira de Chaves, who is based in Portugal.

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Exclusive: Tenaska advancing 10 CCS projects

Independent power development company Tenaska is advancing a portfolio of more than 10 carbon capture and sequestration hubs across the US. We spoke with Bret Estep, who heads up the CCS strategy for the firm.

Tenaska, a Nebraska-based energy company, is advancing a portfolio of more than 10 carbon capture and sequestration projects in the US, Vice President Bret Estep said in an interview.

The portfolio includes three previously announced projects that are highly developed along with seven others that have not been publicly disclosed, Estep added. Tenaska is focused on the transport and storage aspects of the CCS value chain.

“Our base facility is 5 million metric tons per year of storage capacity, and then the necessary pipeline infrastructure to bring those emissions in,” he said.

The base facility design will cost approximately $500m to build, but varies depending on the land position, site geology, and required pipeline miles, Estep said.

“For us, as we plan, I generally use a big rule of thumb to say these are around $500m overnight cost projects,” he said. “Just the storage facility itself, you might be in the $250m to $400m range. And then in really difficult places where there are a lot of pipeline miles, and those are expensive pipeline miles, it might be another $200m or $300m of just pipe.”

Estep says that Tenaska, as a private company, has flexibility on the eventual financing structure for projects, but that project financing is an option. He said the company has held discussions with potential financial advisors but declined to comment further.

Tenaska’s three announced projects are the Longleaf CCS Hub in Mobile, Alabama; the Pineywoods CCS Hub in Houston; and the Tri-State CCS Hub in West Virginia, Ohio, and Pennsylvania.

According to Estep, additional projects are going forward in Corpus Christi, New Orleans/Baton Rouge, and Central Florida. Further inland, Tenaska has two projects in Dallas, another in Oklahoma and another in Indiana.

Finding emitters

The projects “are not all easy – there’s a lot of competition out there,” Estep said. “In some places like let’s say Houston, there are a lot of other folks around, but there’s also a lot of emissions around. So I think there’s room for many people to be successful here.”

In other places like Mobile, Alabama or the Tri-State project, which are harder to develop, Tenaska is the only CCS developer, he added. 

As an example, the West Virginia project will likely be more costly to develop, given the suboptimal geology of the region. Still, the project benefits from a $69m DOE grant to support geologic characterization and permitting for the site.

For its CCS business, Tenaska makes money through what Estep calls a “plain vanilla” version of transport and storage: the take-or-pay contract.

“The emitter installs the capture equipment, they’re the taxpayer of record – they have whatever commodity uplift or green premium they can get on their product,” he said. “And they simply need someone to transport and store that CO2 long term really to qualify for that 45Q” tax credit.

For the Longleaf CCS project in Mobile, Estep places potential customers into four quadrants. The first is existing emitters like steelmakers, power plants, gas processing and pharmaceutical companies. “There’s less project-on-project risk in that way.”

The second is blue molecules. “There’s a growing blue molecule effort in that part of the world,” he said. Quadrant three is combined cycle with capture (though Tenaska is not pursuing a combined cycle for Longleaf) and quadrant four is direct air capture.

Tenaska is a participant in the Southeast DAC Hub, led by Southern States Energy Board, which received a grant of over $10m from the DOE.

“We see many emitters across industries from gas processing to cement, steel, power gen, you name it,” Estep said. “They want to do their own capture, or they want to deal straight with a capture technology, an EPC, or a standalone capture-as-a-service provider. And then what they really want is someone to come to their fence line and take the CO2 and store it long term, durably, safely,” he added. “That’s what we do.”

‘Intercept problem’

Tenaska is still about a year away from beginning to order long lead time items like specialized metallurgy or pipe, but will begin putting in orders once it has more visibility on matching up its development timeline with that of its customers.

Early on, Estep and his teams were sprinting to acquire land positions and submit permits, including some Class VI permits from the EPA, which are under review. But “the script almost totally flips” at that point, because under Tenaska’s hub and spoke model, “we want to be optimized for customers,” he said.

The firm looks at permitting timelines and the earliest likelihood of construction and injection versus when the emitter will likely take FID and begin capturing, “which we call the intercept problem,” Estep said.

Tenaska is the 100% owner of the projects at this point, and Estep believes they have put together a unique portfolio, “in that it’s diversified by customer, it’s diversified by EPA region, it’s diversified by geology and state.”

Estep added: “These kind of assets where there’s geology and storage, they can go the power gen route, they can go the hard-to-decarbonize route, cement and steel, they can go the new power gen route that’s advanced, they can go direct air capture, they can go to the molecule.”

“It’s a really interesting set of infrastructure projects that we are very bullish on for that reason.”

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exclusive

Renewable hydrogen developer in exclusivity with strategic investor

A renewable hydrogen developer based in the western US is reaching the final stages of a capital raise with an investor in exclusivity.

NovoHydrogen, the Colorado-based renewable hydrogen developer, is in exclusivity with clean energy investment platform Modern Energy, according to two sources familiar with the matter.

ReSource reported in February that GreenFront Energy Partners was advising the company on a Series A.

NovoHydrogen CEO Matt McMonagle said previously that the company has about 30 projects in development in the US, ranging from a few megawatts to hundreds of megawatts. Its most active markets are the West coast, Northeast, Appalachia, Texas and the Rocky Mountains, though the company is not geographically constrained.

The company aims to begin construction on its first projects by the end of this year, the executive had said.

NovoHydrogen declined to comment. GreenFront and Modern Energy did not respond to requests for comment.

Modern Energy, a certified B-Corporation, recently put $90m into net metered solar developer Industrial Sun along with partner EIG. In 2020 EIG committed USD 100m to Modern Energy through a debt facility to fund the development of clean energy assets.

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