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JERA Americas and Uniper in agreement for low carbon hydrogen and ammonia supply

Uniper will be a core customer for the supply from the proposed Gulf Coast project.

JERA Americas & Uniper announced today a non-binding Heads of Agreement, together with ConocoPhillips, for an ammonia sale to Uniper and that moves their cooperation on development of a low-carbon ammonia production facility along the US Gulf Coast to the next phase.

The announcement builds on a Memorandum of Understanding (MOU) the parties signed in September 2022 to assess the potential for developing ammonia production facilities in the region. The project would have an initial production capacity of 2 MTPA of low-carbon ammonia with potential for expansion in the future.

ConocoPhillips and JERA Americas (a wholly owned subsidiary of JERA Co., Inc.) plan to jointly develop the production facility project which would accelerate production and supply of low-carbon fuel to markets in the US, Europe, Japan, and greater Asia. The project will also include evaluation and development of carbon capture and sequestration (CCS) facilities. The proposed ammonia production facility would produce hydrogen and convert it into clean ammonia for transport to markets abroad with a target of achieving first commercial deliveries by the end of the decade.

  • Steven O’Rourke, Chief Executive Officer of JERA Americas said, “We are very pleased to announce this contracting progress with Uniper SE as a core customer for our low carbon hydrogen/ammonia project. In close collaboration with our development partner ConocoPhillips, this builds on the sales MOU we signed last year. The rapid development of global-scale, low carbon hydrogen/ammonia production is critical to the timely realization of our collective global energy transition initiatives. We continue to see strong demand for ammonia as a hydrogen carrier to a wide variety of users in Europe and Asia.”
  • Carsten Poppinga, Chief Commercial Officer for Uniper SE said: “Projects like this one are critical to moving responsibly toward greener feedstocks while ensuring security of supply for our customers. Developing production capability now to ensure the clean hydrogen and ammonia volumes that will be needed in the future is a key aspect to accelerating the energy transition in Europe and globally. This project offers some real opportunities in that regard, and we are pleased to be associated with it.”

Uniper separately has also announced it plans for a “Green Wilhelmshaven” with its combination of hydrogen imports and production to create a common European hydrogen market and has already submitted the project to the German Federal Ministry of Economics as an Important Project of Common European Interest (IPCEI). IPCEIs are intended to promote integrated projects along the entire hydrogen value chain.

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BlackRock’s Navigator CO2 pipeline files updated permit application

Facing local opposition, BlackRock’s $3.4bn Navigator CO2 pipeline has filed an updated permit application with the Illinois Commerce Commission.

BlackRock-backed Navigator CO2 Ventures has filed an updated permit application with the Illinois Commerce Commission.

The new proposal reflects an expanded scope of the carbon capture, utilization, and storage project, Heartland Greenway, and includes the addition of 42 miles of proposed pipeline that will connect to additional permanent storage locations in central Illinois.

The Navigator CO2 pipeline has faced pushback from residents and local authorities across its footprint. Proponents previously withdrew an application for eminent domain powers in Illinois after state regulators said the filing was incomplete. The company then announced it would reapply with an expanded route.

The project scope includes 21 carbon dioxide collection points – at midwestern biofuel plants – along with 1,350 miles of new pipeline and four booster stations across Illinois, Iowa, Minnesota, Nebraska, and South Dakota.

Project costs, including capture and sequestration facilities, are projected at approximately $3.4bn.

The proposed pipeline is contracted with industrial producers to capture, transport, and store up to 10 million metric tons of CO2 annually. When fully expanded, the system will be able to transport up to 15 MMT of CO2 annually, according to documentation. Construction of the project is expected to commence in 2Q24 pending receipt of regulatory approvals.

Equity funding for the project is primarily sourced from BlackRock’s Global Energy & Power Infrastructure Fund III, which has committed equity of $5.1bn.

Development capital cost is estimated at $245m, which includes detailed engineering, property survey work, and acquisition of real property interests for the pipeline system and the sequestration facilities to be utilized in the construction phase. The development phase of the project is funded through equity commitments from BlackRock, the Navigator management team, and other investors.

The construction phase of the project will be funded by incremental equity sourced from GEPIF III and other investors, along with a project financing facility sourced by a consortium of lenders. The project has commitments from GEPIF III and other investors for incremental equity required for the construction phase.

On or near the commercial operation date of the project, a long-term debt facility will be put in place to refinance the construction loans, according to the application.

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Plug Power finalizing $1.6bn DOE loan facility

Executives from liquidity-strapped Plug Power said this morning that they are in the term sheet phase for a $1.6bn loan facility from the Department of Energy. The company burned through another roughly $360m of unrestricted cash in 4Q23, and is implementing a cash management program to avoid another ‘going concern’ warning by the time it files its 10-K.

Plug Power is finalizing a $1.6bn loan facility with the Department of Energy’s Loan Programs Office, CEO Andy Marsh said on an investor update call today.

The New York-based company, which is facing a cash crunch, is in the term sheet phase for the loan facility, Marsh noted, which would help shore up its liquidity in the near term.

Marsh also announced that Plug’s Georgia facility is now operational, making it the largest PEM-based green hydrogen facility in operations in North America.

Last year Plug was on the hunt for a loan facility with Goldman Sachs as advisor, as reported by ReSource.

CFO Paul Middleton said the company has received offers for debt but not on terms that are acceptable to the company. For comparison, under the DOE loan structure, the interest rate on the loan facility will not go higher than 6.5%, the executives said.

Its cash management strategy, Middleton added, will focus on utilizing at-the-market (ATM) share offerings, reducing capex and increasing margins, including through raising product prices, and securing the DOE facility. 

In particular, Plug is focused on solving the ‘going concern’ issue with auditors by the time it files its year-end 10K filing with the Securities and Exchange Commission, including through the use of a $1bn share offering program. An ATM program allows the issuing company to raise capital through share offerings as needed.

The company has also slowed investments into projects in Texas and New York until it finds a better financing solution, the CFO said. And the achievement of operations at the Georgia facility and the expected 2024 commercial operations date for the Tennessee facility will improve efficiencies.

Overall, Plug is seeking to reduce its cash burn by 70% in 2024 compared to 2023, and is targeting positive free cash flow in the next 12 months, according to Middleton.

The company’s equity has taken a beating in recent months, but is trading up by over 20% in pre-market trading to $3.44 per share.

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Canada to fund CAD 800m for clean fuel projects

60 projects have been selected to receive funding through Canada’s CAD 1.5bn Clean Fuels Fund.

Canadian Minister of Natural Resources Jonathan Wilkinson announced that approximately 60 projects have been selected to receive funding under the Government of Canada’s CAD 1.5bn Clean Fuels Fund (CFF).

These projects represent a first tranche of the highest-ranking applications from last year’s call for proposals and have a total combined value of more than CAD 3.8bn. They include production facilities, as well as feasibility and front-end engineering and design studies, spanning seven jurisdictions and covering five different fuel types.

The federal government is undertaking negotiations to finalize the terms of funding for each project, and the total federal investment in these projects will be up to CAD 800m. This funding will help project proponents address critical barriers to growth in the domestic clean fuels market and lays the groundwork for the low-carbon fuels of the future.

A second tranche of projects, from last year’s call for proposal, is currently being reviewed, with funding decisions expected to be finalized in December. Once successful applicants have been informed, Natural Resources Canada will start contribution agreement negotiations.

Canada’s clean fuels industry is rapidly growing, owing to the global demand to reduce greenhouse gas emissions and bolster energy security. The importance of continued investment into the production, development and distribution of clean fuels together with their infrastructure and technology is clear, as Canada strives to position itself as a global leader with investments such as the CFF.

At today’s announcement, Minister Wilkinson also highlighted a combined investment of more than $8.8m to six organizations for 10 hydrogen and natural gas refuelling stations to help accelerate the decarbonization of road transportation. Federal funding for these projects was provided through Natural Resources Canada’s Zero-Emission Vehicle Infrastructure Program (ZEVIP) and the Electric Vehicle and Alternative Fuel Infrastructure Deployment (EVAFIDI).

The funding under ZEVIP and EVAFIDI includes:

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Gas-fired peaker sale touts hydrogen blend potential

An equity process for 25% ownership of a California peaker plant includes plans to blend up to 30% hydrogen as part of the sales pitch, according to a teaser.

An opportunity to acquire 25% of the Sentinel Energy Center in California includes decarbonization initiatives like blending 30% hydrogen and installation of on-site battery storage, according to two sources familiar with the matter.

Project Oasis is being run by CIBC, the sources said. Voltage Finance, an entity managed by Guggenheim Partners Investment Management, is exploring the sale of its 25% indirect equity interest in the 850 MW generating facility in Riverside County.

The facility has more than 75% of its capacity contracted through 2027, according to a teaser seen by ReSource. The potential to execute a long-term green hydrogen offtake contract on several of Sentinel’s turbines is being evaluated.

“Sentinel is pursuing the implementation of hydrogen blending capabilities and has advanced the engineering and design through an agreement with a global OEM with beta testing expected in Q1 2025,” the document states.

Sentinel is also co-located with 15 MW of battery storage.

Guggenheim and CIBC did not respond to requests for comment.

Diamond Generating holds a 50% stake in Sentinel. The remaining 25% interest is owned by California-based fund manager Climate Adaptive Infrastructure (CAI), which bought its stake from Partners Group last year.

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Denbury to transport CO2 for Louisiana blue methanol project

A subsidiary of Denbury Inc. will transport and store CO2 for a planned blue methanol plant in Lake Charles, Louisiana.

Denbury Carbon Solutions has executed a 20-year definitive agreement to provide CO2 transportation and storage services to Lake Charles Methanol in association with that company’s planned 3.6 MMPTA blue methanol project, according to a press release.

LCM’s facility will be located along the Calcasieu River near Lake Charles, Louisiana, approximately 10 miles from Denbury’s Green Pipeline.

The facility is designed to utilize Topsoe’s SynCORTM technology to convert natural gas into hydrogen which will be synthesized into methanol while incorporating carbon capture and sequestration.

The process is anticipated to deliver more than 500 million kilograms of hydrogen per year as a feedstock to produce the 3.6 MMTPA of blue methanol.

LCM is finalizing its major permits to begin construction. The project is expected to reach a Final Investment Decision in 2023 with first production anticipated in 2027.

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Exclusive: Zero-emission locomotive start-up in Series B capital raise

A locomotive start-up focused on the US market for zero-emission freight trains is undergoing a Series B capital raise, with sights on a much larger Series C raise next year.

OptiFuel Systems, a provider of zero-emission line haul locomotives and generation solutions, is conducting a $30m Series B capital raise.

The South Carolina-based firm is seeking to finalize the Series B by the end of this year, and plans to use proceeds to advance production of its zero-emission technologies for the rail industry, which represents a massive decarbonization opportunity, CEO Scott Myers said in an interview.

Meanwhile, the firm will seek to tap the market for around $150m for a Series C next year, Myers added. The company is not working with a financial adviser. 

While the Series B will focus on bringing to production some of OptiFuel’s smaller rail offerings, such as the switcher locomotives, the Series C will be mostly dedicated to progressing testing, manufacturing, and commercialization of its larger line haul locomotive.

The company is also considering making its own investments into digesters for RNG facilities, from which it would source the gas to run its RNG-fueled locomotives. As part of its offering, OptiFuel also provides refueling infrastructure, and envisions this aspect of its business to be just as profitable as selling trains.

“We anticipate that we would be the offtaker” of RNG, “and quite potentially, the producer,” Cynthia Heinz, an OptiFuel board member, said in the interview.

A systems integrator, OptiFuel offers modular locomotives for the freight industry that can run on zero-emission technology such as renewable natural gas, batteries, and hydrogen. The company recently announced that it will begin testing of its RNG line haul locomotive, which is a 1-million-mile test program that will take two years and require 10 RNG line haul locomotives.

Image: OptiFuel

The company’s target market is the 38,000 operating freight trains in the U.S., 25,000 of which are line haul locomotives run by operators like BASF, Union Pacific, and CSX. Fleet owners will be required to phase out diesel-powered trains starting next decade following passage of in-use locomotive requirements in California, which includes financial penalties for pollution and eventual restrictions on polluting locomotives. Other states are evaluating similar measures.

“The question is not will the railroads change over: they have to,” Myers said. “The question is, how fast?”

Following completion of testing, OptiFuel aims to begin full production of the line haul locomotive – which has a price tag of $5.5m per unit – in 2028, and is aiming to produce 2,000 per year as a starting point. The smaller switcher units are priced between $1.5m and $2.5m depending on horsepower.

OptiFuel has held discussions with Cummins, one of its equipment providers, to source at least 2,000 engines per year from Cummins to support its production goal. 

“That’s a $10bn-a-year market for us,” Myers added.

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