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Hydrogen mobility solutions provider hires advisor for capital raise

A hydrogen mobility solutions provider with offices in Europe and the US is conducting a second round of equity fundraising and has hired an investment bank for the effort.

Quantron, the Germany and US-based hydrogen trucking manufacturer, has mandated a financial advisor with offices on both continents for a capital raise, according to two sources familiar with the matter.

Stifel is leading the process, seeking to raise up to EUR 200m, the sources said. The aim is to close the round by the end of the year with the milestone of a convertible note by summer.

ReSource first reported on the raise in November, noting that it implies a valuation of up to EUR 1bn.

Quantron in September closed on a EUR 50m Series A with NASDAQ-listed Ballard Power Systems and German machinery manufacturer Neuman & Esser as investors.

Looking forward to the company wants to work with a US strategic or private equity interest committed to hydrogen, the sources said.

Officials at Quantron and Stifel did not respond to requests for comment,

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US SAF producer targeting 1H24 monetization

Calumet Specialty Products subsidiary Montana Renewables – now the largest producer of sustainable aviation fuel in North America – has received interest for the business indicating valuations in excess of the entire company’s current enterprise value.

Calumet Specialty Products is expecting to close on a monetization of a minority equity stake by early 2024 in its Montana Renewables subsidiary, which is now the largest sustainable aviation fuel producer in North America.

The company has been exploring a monetization, including an IPO, of Montana Renewables with Lazard as an advisor since last year, and would use proceeds to deleverage the parent company. Executives said today they are speaking with bulge bracket banks regarding the timing of a potential IPO or minority stake sale.

“We continue to expect a potential monetization of Montana Renewables to complete the deleveraging of Calumet,” CEO Todd Borgman said in prepared remarks. “For some time we’ve discussed the possibility of a Montana Renewables IPO, private monetization, or even both. We continue to receive clear feedback: that Montana Renewables is a differentiated business, with transformational value potential to Calumet, well in excess of the entire company’s enterprise value.”

Calumet had engaged Lazard last year to conduct a process that culminated in a $250m investment in Montana Renewables from Warburg Pincus in August, 2022. The investment, in the form of a participating preferred equity security, valued Montana Renewables at a pre-commissioning enterprise value of $2.25bn.

The facility began making SAF shipments to Shell as an offtaker earlier this year.

In response to a question, Calumet executives pointed to the enterprise values of publicly traded energy transition companies, noting that Montana Renewables should align with that “at a minimum, if not get a premium for the competitive advantages that we’ve got, due to location, due to advanced pre-treater technology we’ve got, and due to the fact that we’re now North America’s largest SAF producer.”

Calumet’s equity trades at $15.80 per share and a $1.26bn market cap.

The company is evaluating an expansion of its SAF production at Montana Renewables and has purchased a second reactor and applied for a $600m loan from the DOE.

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Australia’s Frontier Energy appoints MD with hydrogen background

Sam Lee Mohan will help Frontier as it transitions into the next phase of a project in Western Australia.

Australia-based Frontier Energy Limited has appointed Sam Lee Mohan as managing director.

According to a company press release, Lee Mohan has been appointed at a critical stage in Frontier’s evolution, as it transitions through the next stage of development at its 100% owned Bristol Springs Green Hydrogen Project.

During the next 12 months this includes the next level of study work, offtake, project financing and the commencement of construction.

Lee Mohan has over 20 years’ experience in the energy and utilities industry. His previous senior management positions include Global Head of Hydrogen of Xodus Group, a subsidiary of Subsea 7, where he developed and led the company’s overall hydrogen strategy. In this role, he also conceptualized the company’s largest hydrogen project, Project MercurHy.

Prior to Xodus Group, Lee Mohan spent six years at ATCO, where he was instrumental in developing the company’s hydrogen strategy, including the conceptualization, design and construction of Australia’s first, green hydrogen Microgrid, the Clean Energy Innovation Hub.

The Bristol Springs Green Hydrogen Project is located 120km from Perth in Western Australia. The company recently completed a pre-feasibility study that outlined the Project’s potential to be both an earlier mover and one of the lowest cost  green hydrogen assets in Australia, according to the company.

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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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US hydrogen and LNG developer raising capital

A Texas-based project developer is conducting a development capital raise for a flagship LNG and green hydrogen project in the Northeast.

New Energy Development Company, a Katy, Texas-based developer with offices in Boston, Texas, is raising between $5m and $8m for an LNG liquefaction, storage and re-gasification facility with additional green hydrogen production and storage, Partner Scott Shields said in an interview.

The company is not using a financial advisor, Shields said, noting that a larger second round capital raise will likely start near the beginning of 2024.

New Energy has secured a brownfield site for a peak-shaving LNG facility in New England with 2 billion cubic feet of storage capacity and 50 MW of solar pv, Shields said. Also planned is an expandable 40 MW PEM electrolyzer line.

He declined to name the state in which the project is located, adding that the company is trying to put a strong support system and marketing plan in place before the location is made public.

The proceeds of the capital raise will go in part to hiring local lawyers and engineering and design work (pre-FEED and FEED), through to FID, Shields said. The project will be built in two phases, Phase 1 being the LNG component and Phase 2 focusing on green hydrogen.

The LNG facility will be the offtaker for the hydrogen, which will run the plant when the solar is insufficient. Through an open season process New Energy has identified five investment grade offtakers for the LNG.

Ramping capex

“We’ve been self-funding up until now,” Shields said of New Energy, which has also put capital and development resources into half-a-dozen other projects around the country.

It’s time for a ramp up in capital expenditures and New Energy is in discussions with strategic and private equity providers, Shields said, noting that the company would prefer the former. Discussions include options to fund just the flagship project, as well as platform equity.

Shields noted that he has investment banking experience and that New Energy Managing Partner Alexander “Hap” Ellis serves as chairman of Old Westbury Funds and the George and Barbara Bush Foundation.

New Energy has partnered with McDermott International to develop patented GreenER hydrogen facilities, a modular, expandable hydrogen facility that can produce 24,000 kg per day (2,760 MMBtu) of renewable hydrogen. The companies in 2021 completed engineering deliverables for multiple designs which are marketed as ideal for grid-scale blending with natural gas pipelines, blending for existing or new power generating facilities and storage injection into salt caverns and above ground storage tanks.

The company has also combined GreenER LNG and hydrogen production and storage plants into an integrated energy hub, capable of producing an additional 200,000 MMBtu of LNG.

New Energy recently hired Chico DaFonte, formerly a vice president at Liberty Utilities, a subsidiary of Algonquin Power, as executive vice president working on LNG and hydrogen projects.

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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: Coal-to-ammonia developer raising capital with advisor

A coal-to-blue ammonia project developer has hired a bulge bracket bank and is seeking to raise development through FID capital for a flagship project in Wyoming.

Glenrock Energy has hired an advisor and is seeking to raise $33m in development capital for its first coal-to-blue ammonia project in Kemmerer, Wyoming.

The Wyoming-based developer is working with RBC Capital Markets on the capital raise, which includes pre-FID development capital as well as eventual construction financing for the estimated $2.5bn project, Glenrock Managing Director Matthew Coeny said in an interview.

The proposed facility, known as Kemmerer Decarbonization Works, would utilize approximately 1.8 million tons per year of Wyoming coal, either from the nearby Kemmerer coal mine or other sources, and convert it to 600,000 tons per year of blue ammonia. It would also capture 2.7 metric tons of CO2 per year.

The $33m capital raise would cover pre-FID development activities. However, any development capital raised could be matched on a one-to-one basis through a Wyoming state funding program known as the Governor’s Energy Matching Fund, meaning Glenrock’s private capital need is $16.5m, Coeny said.

The firm is engaging with financial institutions and potential strategic partners as well as high-net-worth, family-office types, particularly those with an interest in Wyoming. 

Glenrock estimates there is a 500,000 metric ton per year deficit for ammonia in the 300-mile radius around the Kemmerer mine, and is targeting consumers in the area as primary offtakers, Coeny added. The proposed facility is near rail lines that would allow access to West Coast ports for potential export.

The project design utilizes four established technologies in combination: coal gasification, ammonia synthesis, onsite electricity generation, and carbon capture.

For the carbon capture and sequestration aspect of the project, Glenrock’s preferred alternative would be to pipe into the existing CO2 system in the state owned by ExxonMobil for sequestration. Alternatively, Glenrock is development its own sequestration projects in central Wyoming.

Once the pre-FEED study is launched, the project has a roughly 18 – 24 month process leading up to FID, followed by an anticipated three years of construction. That means the project could be operational as early as late 2028, Coeny said.

Coeny said that the selection of coal as a feedstock serves a number of purposes: it repurposes existing coal reserves and provides a hedge against swings in natural gas prices, such as those experienced following the Russian invasion of Ukraine.

While coal is cheaper than natural gas on a per-MMBtu basis there is an added cost to gasify it. “Our expectation based on the long-term outlook for natural gas is that Wyoming coal is competitive with natural gas production […] and not subject to price volatility,” he said. 

Furthermore, he added, the project’s economics result in a production cost below the anhydrous ammonia prices published by the USDA for the U.S. Midwest. Anhydrous ammonia was quoted with an average price of $776.25 per ton in Iowa last week.

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