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Humble Midstream II receives capital commitment from Quantum Capital

Humble Midstream II is focused on developing and operating energy infrastructure in North America, including traditional midstream infrastructure and infrastructure for the energy transition.

Humble Midstream II Partners LLC has formed a partnership with Quantum Capital Group, according to a news release.

Based in Denver, Colorado, Humble II is pursuing the development and operation of energy infrastructure projects across North America.  The company is led by industry veterans Steven Huckaby as Chief Executive Officer and Walter Hagstrom as Chief Commercial Officer; the pair previously worked together at Humble Midstream I LLC.

“With this commitment from Quantum, we are able to focus on building infrastructure solutions that support the North American energy complex,” said Humble II Chief Executive Officer Steven Huckaby. “As energy security and sustainability remain important issues, we believe that traditional and low-carbon energy solutions will each play a vital role in fueling our world.”

Additionally, Humble II added industry veteran Michael R. Culbert to the company’s Board of Directors. Culbert brings previously served as Director and Vice Chair of PETRONAS Energy Canada Ltd. and as Director and President of Pacific NorthWest LNG LP. He is also a former Co-Founder, Director, President and CEO of Progress Energy Ltd., an oil and gas exploration and production company.

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HTEC to receive B.C. funding for hydrogen trucking pilot

HTEC will buy, test and demonstrate hydrogen-powered trucks for fleet operators throughout B.C.

HTEC is set to receive $16.5m in funding from British Columbia for a pilot program that uses hydrogen to power commercial trucking.

Under the pilot, B.C.-based hydrogen-energy company HTEC will procure six different heavy-duty fuel-cell trucks and complete upgrades to a hydrogen-fuelling station in Tsawwassen and a maintenance facility in Abbotsford.

The B.C. Pilot Hydrogen Truck Project aims to start the use of hydrogen in the commercial transportation sector, according to a news release.

Colin Armstrong, president and CEO of HTEC, said: “Through the Province’s significant investment in zero-emission trucks in B.C., and the simultaneous development of robust infrastructure to enhance their operations, this pilot project symbolizes a remarkable leap toward a sustainable future. It marks the first-ever deployment of heavy-duty hydrogen fuel-cell electric trucks for a diverse range of fleet operators in the province, a historic moment for the trucking industry. We applaud the provincial government for their vision and support, and we are delighted to be the wheels on the ground and driving force behind this groundbreaking project.”

HTEC designs, builds and operates hydrogen production facilities, infrastructure and supply.

HTEC will buy, test and demonstrate the hydrogen-powered trucks for fleet operators throughout B.C. The project also brings together Canada’s world-leading hydrogen and vehicle-technology companies. The Province’s funding for the pilot is being administered by the Innovative Clean Energy (ICE) Fund.

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Japan’s ENEOS makes investment in Gulf Coast hydrogen project

Established by Azimuth Capital Management, MVCE is developing a large plant for the manufacture of hydrogen, MCH, and ammonia to supply Japan.

ENEOS Corporation has made an equity investment in MVCE Gulf Coast, LLC, according to a news release.

MVCE seeks to produce clean hydrogen in the Gulf of Mexico and build a clean hydrogen supply chain between Japan and the US.

“ENEOS is working to build low-cost, stable clean hydrogen supply chains in Japan and overseas,” the release states. “As one aspect of the
initiative, ENEOS is investigating the joint production of hydrogen with business partners in Asia, the Middle East, and Australia as well as the production and transportation of methylcyclohexane (MCH),  an effective medium for the efficient form of hydrogen storage and transportation.”

Established by Azimuth Capital Management, MVCE is developing one of the world’s largest plants for the manufacture of hydrogen, MCH, and ammonia in
the Gulf of Mexico. Through its equity participation, ENEOS will verify the commercial feasibility of manufacturing cost-competitive and clean hydrogen in the Gulf of Mexico and exporting MCH to Japan.

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Pattern Energy signs green ammonia LOI with Germany’s Mabanaft

As part of the LOI, Mabanaft also plans to evaluate the opportunity to potentially become a co-investor next to Pattern Energy and share ammonia and infrastructure expertise.

German Energy company Mabanaft has signed a letter of intent with US-based Pattern Energy to consider a potential transaction for the supply to Mabanaft of green ammonia.

The green ammonia would be produced by Pattern Energy at the Port of Argentia, in the Canadian province of Newfoundland and Labrador, starting in 2027, according to a news release.

The green ammonia production would require a new production facility with an estimated production capacity of 400 tonnes of ammonia per day. As part of the LOI, Mabanaft also plans to evaluate the opportunity to potentially become a co-investor next to Pattern Energy and share ammonia and infrastructure expertise. The green ammonia, produced with wind energy and hydroelectricity, is expected to make an important contribution to supplying industry in northern Germany and beyond with energy from renewable sources.

The LoI was signed by representatives of both companies at Mabanaft’s headquarters in Hamburg in the presence of the German Federal Minister for Economic Affairs and Climate Action Habeck, the Canadian Minister for Energy and Natural Resources Wilkinson and Hamburg’s Senator for Economic Affairs Leonhard. Habeck and a political delegation from Canada also visited Mabanaft as part of their jointly organised German-Canadian Hydrogen and Ammonia Producer-Offtaker Symposium in Hamburg on 18 March 2024. The delegation trip included visits to companies in Hamburg that are engaged in hydrogen production, hydrogen storage or hydrogen use.

Hamburg’s Senator for Economic Affairs Dr Melanie Leonhard: “The planned collaboration will bring energy from Canadian wind to Hamburg! In future, hydrogen and its derivatives are to be produced with wind energy in the windy region and then transported by ship to the German hydrogen capital, Hamburg. Thanks to the strong industry here, there is security of supply for the energy-intensive industries. Through cooperation between the Port of Hamburg and our Canadian partners, we will help to create the necessary infrastructure on the Canadian side.”

The “New Energy Gate” in Hamburg is also set to play a key role in Mabanaft’s planned imports of green ammonia. The planned New Energy Gate Hamburg is to become Mabanaft’s first major hub for the import, storage and processing of fuels from renewable energy sources. In November 2022, Mabanaft announced plans to build up an import terminal for green energy in the Port of Hamburg, with the US company Air Products as an anchor customer. Volker Ebeling, Senior Vice President New Energy, Supply and Infrastructure at Mabanaft, says: “We are absolutely convinced that hydrogen and its derivatives will play a key role in the energy supply of industrialised nations. The Letter of Intent we have signed today with Pattern Energy is a renewed commitment to this path.”

Cary Kottler, Chief Development Officer of Pattern Energy says: “Pattern Energy is thrilled to be working closely with Mabanaft on the further development of the Argentia Renewables project in Newfoundland & Labrador.  As a renewable energy leader in North America, Pattern Energy seeks to partner with energy industry leaders in Europe to fully develop the potential of green fuels production and export infrastructure in North America. The Argentia Renewables project is well positioned to be an early mover in the green hydrogen economy and will serve as an important element in Europe’s energy transition.”

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Exclusive: Riverstone Credit spinout preparing $500m fundraise

Breakwall Capital, a new fund put together by former Riverstone Credit fund managers, is preparing to raise $500m to make project loans in decarbonization as well as the traditional energy sector. We spoke to founders Christopher Abbate and Daniel Flannery.

Breakwall Capital is preparing to launch a $500m fundraising effort for a new fund – called Breakwall Energy Credit I – that will focus on investments in decarbonization as well as the traditional energy sector.

The founders of the new fund, Christopher Abbate, Daniel Flannery, and Jamie Brodsky, have spent the last 10 years making oil and gas credit investments at Riverstone Credit, while pivoting in recent years to investments in sustainability and decarbonization.

In addition to bringing in fresh capital, Breakwall will manage funds raised from Dutch trading firm Vitol, for a fund called Valor Upstream Credit Partners; and the partners will help wind down the remaining roughly $1bn of investments held in two Riverstone funds.

Drawing on their experience at Riverstone, Breakwall will continue to make investments through sustainability-linked loans across the energy value chain, but will also invest in the upstream oil and gas sector through Valor and the new Breakwall fund.

“We’re not abandoning the conventional hydrocarbon economy,” Flannery said in an interview. “We’re embracing the energy transition economy and we’re doing it all with the same sort of mindset that everything we do is encouraging our borrowers to be more sustainable.”

In splitting from Riverstone Credit, where they made nearly $6bn of investments, the founders of Breakwall said they have maintained cordial relations, such that Breakwall will seek to tap some of the same LPs that invested in Riverstone. The partners have also lined up a revenue sharing arrangement with Riverstone so that interests are aligned on fund management.

The primary reason for the spinout, according to Abbate, “was really to give both sides more resources to work with: on their side, less headcount relative to AUM, and on our side, more equity capital to reward people with and incent people with and recruit people with, because Riverstone was not a firm that broadly distributed equity to the team.”

Investment thesis

A typical Breakwall loan deal will involve a small or mid-sized energy company that either can’t get a bank loan or can’t get enough of a bank loan to finance a capital-intensive project. Usually, a considerable amount of equity has already been invested to get the project to a certain maturity level, and it needs a bridge to completion.

“We designed our entire investment philosophy around being a transitional credit capital provider to these companies who only needed our cost of capital for a very specific period of time,” Flannery said.

Breakwall provides repayable short-duration bridge-like solutions to these growing energy companies that will eventually take out the loan with a lower cost of capital or an asset sale, or in the case of an upstream business, pay them off with cash flow.

“We’re solving a need that exists because there’s been a flock of capital away from the upstream universe,” he added.

Often, Breakwall loan deals, which come at pricing in the SOFR+ 850bps range, will be taken out by the leveraged loan or high yield market at lower pricing in the SOFR+ 350bps range, once a project comes online, Abbate said. 

Breakwall’s underwriting strategy, as such, evaluates a project’s chances of success and the obstacles to getting built. 

The partners point to a recent loan to publicly listed renewable natural gas producer Clean Energy – a four-year $150m sustainability-linked senior secured term loan – as one of their most successful, where most of the proceeds were used to build RNG facilities. Sustainability-linked loans tie loan economics to key performance indicators (KPIs) aimed at incentivizing cleaner practices.

In fact, in clean fuels, their investment thesis centers on the potential of RNG as a viable solution for sectors like long-haul trucking, where electrification may present challenges. 

“We are big believers in RNG,” Flannery said. “We believe that the combination of the demand and the credit regimes in certain jurisdictions make that a very compelling investment thesis.”

EPIC loan

In another loan deal, the Breakwall partners previously financed the construction of EPIC Midstream’s propane pipeline from Corpus Christi east to Sweeny, Texas.

Originally a $150m project, Riverstone provided $75m of debt, while EPIC committed the remaining capital, with COVID-induced cost overruns leading to a total of $95m of equity provided by the midstream company. 

The only contract the propane project had was a minimum volume commitment with EPIC’s Y-Grade pipeline, because the Y-Grade pipeline, which ran to the Robstown fractionator near Corpus Christi, needed an outlet to the Houston petrochemical market, as there wasn’t enough export demand out of Corpus Christi.

“So critical infrastructure: perfect example of what we do, because if your only credit is Y-Grade, you’re just a derivative to the Y-Grade cost of capital,” Abbate said.

Asked if Breakwall would look at financing the construction of a 500-mile hydrogen pipeline that EPIC is evaluating, Abbate answered affirmatively.

“If those guys called me and said, ‘Hey, we want to build this 500-mile pipeline,’ I’d look at it,” he said. “I have to see what the contracts look like, but that’s exactly what type of project we would like to look at.”

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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

NOx mitigation firm looking to scale

A publicly listed company with a hydrogen burner project backed by one of the largest US utilities could accelerate growth with a capital infusion in pursuit of first-adopter clients. It offers technology that aims to mitigate an underappreciated aspect of the embryonic clean hydrogen ecosystem: blending hydrogen with natural gas can greatly increase NOx emissions when combusted.

ClearSign Technologies, the publicly listed burner solutions provider, is at an inflection point in the development of its products to serve players in the emerging hydrogen landscape, CEO Jim Deller said in an interview.

“We’re new,” Deller said of the company’s emergence on the hydrogen scene. The company is aggressively seeking a place in the hydrogen mainstream as it pursues first-adopter clients. “We need to get our install base up.”

ClearSign recently received a collaboration commitment and pledged funding for its 100% Hydrogen Ultra Low NOx burner project from Southern California Gas Co. This comes on top of the SBIR program Phase 2 Award for $1.6m from the DOE. The company has one year’s cash on hand, according to Deller.

Hydrogen blending increases the output of NOx emissions, which are heavily regulated, Deller explained. A 20% hydrogen blend with fuel gas, for example, causes a 40% increase in NOx emissions.

The goal of the project with SoCalGas is to develop NOx hydrogen burner technology, which the company believes will enable the adoption of hydrogen fuel for industrial heating.

“Your NOx permit is not going to change,” he said. “In order to use even a small amount of hydrogen in your fuel gas, you need a technology that’s going to allow you to maintain NOx emissions for an efficient price.”

Deller said he sees ClearSign as an enabler of the hydrogen transition, pointing to SoCalGas’ need to keep their clients compliant with their operating permits.

“They’re going to have to modify their technology to enable the combustion of hydrogen without exceeding their NOx permits, and that’s where we come in.”

A ‘pivotal point’

ClearSign is open to discussing partnerships and financial options to scale deployment of its technology, Deller said, pointing to potential markets in Texas and the Pacific Northwest.

“We’re certainly open to any company that has a compatible technology,” Deller said.

ClearSign is not engaged for M&A now, but it does have discussions with prospective financial advisors, company spokesperson Matthew Selinger said. “Like any small company, if we had more money we could potentially accelerate faster.”

The company is not considering a spin off now, Deller said, focusing instead on getting traction commercially. ClearSign has not historically taken on debt. Those types of business opportunities are not off the table, but technical synergy and strategic partnerships are first pursued for value creation.

“We’re at a pivotal point, I believe, in the development of our technology,” Deller said. “I’m open to talk about any ideas.”

A technology in development

The burner technology is also applicable to systems that use only hydrogen, Deller said. The Phase 2 DOE grant funding is meant to develop a full range of commercial burners that will operate through a range of fuel gasses up to and including 100% hydrogen.

ClearSign does not have additional partnerships pending announcement, Deller said. But what’s applicable in Southern California is relevant to discussions happening in proposed hydrogen hubs around the country.

The company is headquartered in Tulsa, Oklahoma, along with process burner manufacturing partner Zeeco. It uses third-party manufacturing and will continue to do so, Deller said.

ClearSign also has offices in Seattle and Beijing. The company’s US and Chinese businesses to not have a materials shipping relationship, Deller said. The model followed has manufacturing separated between countries.

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