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Midstream hydrogen firm launches first salt cavern project

A Lotus Infrastructure-backed hydrogen midstream firm plans to develop its first cavern at Moss Bluff for hydrogen storage with an expected commercial operation date in 2026 / 2027.

NeuVentus has secured site control and other ancillary agreements providing for development rights with GCL/Kyle Dome Storage, LLC and GC Land, LLC on the Moss Bluff Salt Dome in Liberty and Chambers Counties, Texas, according to a news release.

The agreements include sufficient property for NeuVentus to develop up to 12 salt caverns to store a broad variety of products, the exclusive right to develop hydrogen cavern storage on certain acreage and rights to obtain easements for related infrastructure over 3,000 acres above and adjacent to the Moss Bluff Salt Dome, such as groundwater production, brine disposal, and high voltage electrical access. The Moss Bluff Salt Dome is a proven geological formation with existing high pressure storage facilities currently operating on the dome, including an existing hydrogen storage cavern.

CEO Sam Porter said in an interview earlier this year that the company will likely seek project financing and tax equity for its first cache of projects in the Gulf Coast region of Texas and Louisiana in six to 12 months.

NeuVentus recently launched with Lotus’ backing. The private equity firm’s position is that they are able and ready to fund all project- and platform-level equity, Porter said.

NeuVentus plans to develop its first cavern at Moss Bluff for hydrogen storage with an expected commercial operation date in 2026 / 2027. The project site is located one mile from three existing hydrogen pipelines and seven miles from the ERCOT/MISO boundary. Once the Moss Bluff storage project is developed, NeuVentus will provide fee-for-service transportation and storage services, which will be a key enabler of the energy transition.

“We are excited to announce our first salt cavern storage project location at Moss Bluff,” Porter said in the news release. “Moss Bluff has an excellent location in the heart of existing and planned hydrogen, carbon capture and other energy transition infrastructure. With numerous announced projects along the Upper Gulf Coast of Texas, Moss Bluff is poised to become a vital hydrogen hub providing system flexibility, stability and liquidity across numerous interconnections. We look forward to becoming a trusted industry partner to some of the world’s largest companies as we provide them with reliable storage and transportation services.”

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$400bn investment needed in US SAF facilities by 2050: report

The report from SkyNRG identifies a $400bn investment opportunity, but notes SAF industry constraints in the form of policy instability and a lack of available feedstocks.

The US sustainable aviation fuel industry needs to invest $400bn in new production facilities if the country is to reach domestic SAF production of 27 billion gallons – equal to 2019 jet fuel demand – by 2050.

Federal tax incentives included in the Inflation Reduction Act will drive SAF production in the US, and could bring capacity to 3 billion gallons by 2030 and reach a 100% jet fuel replacement rate by 2050, according to a report from SkyNRG, a Dutch-based SAF producer.

The report highlights the available tax credits in the form of the Sustainable Aviation Fuel Blender’s Tax Credit of $1.75 per gallon; the Clean Fuel Production Tax Credit available from 2025 – 2027; and the Hydrogen Producer Tax Credit of up to $3 per kg for 10 years for facilities operation before 2033.

Constraints on industry growth include the lack of long-term policy stability and potential strains on availability of SAF feedstocks, according to the report.

“To meet aspirational goals in the US, more [project] announcements would be needed,” a summary of the report says, noting that most new projects will likely use feedstock from corn ethanol and waste materials like agricultural waste, waste biogas or household waste.

Even so, deployment of bio-intermediate pathways like RNG in early years is constrained by the pace of project development, permitting new facilities, and federal policy adaptation.

Meanwhile, the report says, fats, oils and grease markets are under pressure; for new projects in this segment – known as HEFA, or HVO – to materialize, feedstock needs to be freed up by diverting from renewable diesel and biodiesel plants or by producing more vegetable oils domestically.

“With ambitious goals at the federal level around electric vehicles and with several states implementing zero-emission truck sales requirements, it is possible that additional feedstock is freed up for SAF,” according to the report. “However, incentives currently favoring the production of biodiesel and renewable diesel over SAF would also need to shift for HEFA capacity announcements to be successful.”

The report additionally floats the following policy prescriptions to make more feedstock available:

• Curbing exports of whole soybeans to yet-to-be developed crushing facilities to increase soybean oil production. This would affect the US trade balance as well as impacting global soybean meal trade flows.

• Large-scale government support for novel non-edible oilseed crops suitable for conversion into fuel. Appropriate safeguards would have to be in place to avoid indirect land use change effects.

• Increasing soybean acreage by 40 million acres from 87 million acres today to meet soybean oil needs. This would impact corn and wheat markets as soy would have to largely expand on existing cropland. This could in turn have consequences for corn ethanol availability.

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Region-by-region availability of Energy Attribute Certificates

RMI takes a look at theoretical regional availability of Energy Attribute Certificates for purposes of compliance with 45V tax credit guidelines.

RMI has put forward an analysis of the theoretical availability of Energy Attribute Credits across U.S. regional electricity zones to determine if there is enough 45V-qualifying electricity to meet the needs of the seven winning Regional Clean Hydrogen Hubs.

In summary, the analysis finds preliminarily that, “There are enough projected tax credit-qualifying EACs available to meet the stated electrolytic hydrogen production goals across Regional Clean Hydrogen Hubs.”

However, the report adds that “the system of markets and contracts required to access EACs is underdeveloped, and this is a critical challenge to both market formation and the effective operation of the tax credit.”

Read the full report here.

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Williams and Daroga sign MoU to find offtake options

The companies will identify long-term end-use customers for clean hydrogen and offtake options for environmental attributes generated by hydrogen production in Wyoming.

Williams has signed a memorandum of understanding (MOU) with Daroga Power to identify long-term end-use customers for clean hydrogen and offtake options for environmental attributes generated by hydrogen production in Wyoming.

Williams plans to leverage its nationwide assets for the blending, storage and transportation of clean hydrogen to local and regional markets, including the Pacific Northwest via the company’s 4,000-mile bi-directional Northwest Pipeline transmission system that passes through Wyoming.

Deliveries of hydrogen could begin as soon as 2025.

The company is currently working with the University of Wyoming’s School of Energy Resources to evaluate hydrogen production and the impacts of hydrogen blending on existing energy infrastructure in Wyoming. The research is funded by a grant from the Wyoming Energy Authority and is expected to be complete in 2023.

Daroga is a New York-based investor and developer of distributed generation energy assets, including hydrogen fuel cells and solar power generation.

Beyond Wyoming, Williams has joined several recently launched industry-led regional alliances including Appalachian Energy Future (AEF) and Appalachian Regional Clean Hydrogen Hub, or Arch2. Williams is also engaged with the New York State Energy Research and Development Authority (NYSERDA).. Williams has identified two potential projects to deliver hydrogen in New York and New Jersey using the company’s existing infrastructure.

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Advisor Profile: Cameron Lynch of Energy & Industrial Advisory Partners

The veteran engineer and financial advisor sees widespread opportunity for capital deployment into early-stage renewable fuel companies.

Cameron Lynch, co-founder and managing partner at Energy & Industrial Advisory Partners, sees prodigious opportunity to pick up mandates in the hydrogen sector as young companies and early movers attract well-capitalized investors looking for auspicious valuations.

The firm, a three-year-old boutique investment banking outfit with offices in New York and Houston, is broadly committed to the energy transition, but is recruiting for new personnel with hydrogen expertise, Lynch said, adding that he is preparing for a new level of dealmaking in the new year.

“I think we can all expect 2023 will be even more of a record year, just given the appetite for hydrogen,” Lynch said. “Hydrogen is one of our core focuses for next year.”

Cameron Lynch

Lynch started his career as a civil & structural engineer and moved into capital equipment manufacturing and leasing for oil & gas, and also industrial gasses –things like cryoge

nic handling equipment for liquid nitrogen. He started the London office of an Aberdeen, U.K.-based M&A firm, before repeating that effort in New York.

Founding EIAP, Lynch and his business partner Sean Shafer have turned toward the energy transition and away from conventional energy. The firm works on the whole of decarbonization but has found the most success in the hydrogen space.

Earlier lifecycle, better valuations

Hydrogen intersects with oil& gas, nuclear, chemicals, midstream companies, and major manufacturing.

Large private equity funds that want to get into the space are realizing that if they don’t want to pay “ridiculous valuations for hydrogen companies” they must take on earlier-stage risk, Lynch said.

Interest from big private equity is therefore comparatively high for early-stage capital raising in the hydrogen sector, Lynch said, particularly where funds have the option to deploy more capital in the future, Lynch said.

“They’re willing to take that step down to what would normally be below their investment threshold.”

Lynch, who expects to launch several transactions in the coming months with EIAP, has a strong background in oil & gas, and views hydrogen valuations as a compelling opportunity now.

“It’s very refreshing to be working on stuff that’s attracting these superb valuations,” Lynch said.

There’s a lot of non-dilutive money in the market and the Inflation Reduction Act has been a major boon to investors, Lynch said. For small companies, getting a slice of the pie is potentially life changing.

Sean Shafer

The hydrogen space is not immune to the macroeconomic challenges that renewables have faced in recent months and years, Lynch said. But as those same challenges have accelerated the move toward energy security, hydrogen stands to benefit.

Supply chain issues post-COVID pose a potential long-term concern in the industry, and equity and debt providers question the availability of compressors and lead times.

“I would say that’s one of the key issues out there,” Lynch said. There’s also the question of available infrastructure and the extent to which new infrastructure will be built out for hydrogen.

EIAP sees the most convincing uses for hydrogen near term in light-weight mobility and aerospace, Lynch said. The molecule also has a strong use case in back-up generation.

Hydrogen additionally presents companies in traditional fossil fuel verticals the opportunity to modernize, Lynch said, citing a secondary trade EIAP completed earlier this year

California’s Suburban Propane Partners acquired a roughly 25% equity stake in Ashburn, Virginia-based Independence Hydrogen, Inc. The deal involved the creation of a new subsidiary, Suburban Renewable Energy, as part of its long-term strategic goal of building out a renewable energy platform.

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Exclusive: Emissions reduction technology firm in Series A capital raise

A technology start-up that uses plasma to reduce emissions from natural gas and methane flaring is seeking an additional $15m to top off its Series A capital raise. One of its principal products converts natural gas into hydrogen and usable graphene with no CO2 emissions.

Rimere, a climate solutions company with proprietary plasma technology, is seeking to raise an additional $15m as part of its ongoing Series A capital raise.

The start-up recently announced an anchor investment of $10m from Clean Energy Fuels Corp, a publicly listed renewable natural gas firm, and is pursuing further investments from strategics and financial players, with an eye on closing the round in 2Q24, CEO Mitchell Pratt said in an interview.

The company is not currently working with a financial advisor on the Series A capital raise, Pratt said. Its legal counsel is Morrison Foerster.

The anchor investment along with additional funds raised will allow Rimere to advance development and field testing of its two principal products, the Reformer and the Mitigator. 

The Mitigator is a plasma thermal oxidizer that reduces the greenhouse gas potency of small-scale fugitive methane emissions, while the Reformer transforms natural gas into clean hydrogen and usable graphene without creating any CO2 emissions.

The products are meant to work in tandem to decarbonize natural gas infrastructure and deliver cleaner gas to end users in transportation, power generation, and industry.

“We believe that, overall, what the technology does is revalue natural gas reserves and the long-term viability of natural gas for global future energy,” Pratt said.

Commercial strategy

Rimere will develop a commercial strategy throughout the course of this year for the Mitigator, and plans to deploy the product in the beginning of next year.

“We have quite a bit of interest for this as a solution because of the low cost of the product and the terrific results,” Pratt said, noting that the Mitigator removes CO2 for under $5 per metric ton.

In contrast, the Inflation Reduction Act passed in 2022 introduced the Methane Emissions Reduction Program, a charge on methane emitted by oil and gas companies that report emissions under the Clean Air Act. The charge starts at $900 per metric ton of methane for calendar year 2024, increasing to $1,500 for 2026 and beyond.

To be sure, the Mitigator, as a thermal oxidizer, transforms methane, which is a much more potent greenhouse gas, into hydrogen, water, and CO2 for a net reduction of the global warming impact of 200 metric tons a year of CO2.

The Reformer, a container-style unit, is being scaled up to produce 50 kg per day of hydrogen from natural gas along with 150 kg of graphene, a marketable nano carbon where the CO2 is captured. Graphene is used in batteries, composites, medical devices, and concrete to reduce greenhouse gas emissions, among other applications.

Rimere plans to increase the scale of the Reformer to between 400 – 600 kg per day and raise additional funds next year, Pratt said. The amount of funds needed for that is not yet known, he said.

Pratt envisions an application for hydrogen blending using the two products.

“We see it as a way to decentralize hydrogen production, taking advantage of a cleaner natural gas infrastructure, because we’ve applied the Mitigator to cleaning up those fugitive methane emissions that are occurring in the normal operations of equipment,” Pratt said.

For example, Rimere can tap into a natural gas pipeline, take a slipstream of gas, extract the valuable graphene, and then re-inject hydrogen and natural gas back into the pipeline.

Additionally, the blending application can be positioned at an end-use customer’s facility, allowing the Reformer to start blending hydrogen into the gas stream, going into boilers and burners and reducing the CO2 emissions more effectively and immediately, Pratt said.

$1 per kg

Taking the average cost of delivered natural gas and power to industrial users, the company can already produce hydrogen at $1 per kilogram, Pratt said.

For every four kilograms of end-use product – one being hydrogen, the other three graphene – the energy cost allows hydrogen to be produced at or below $1 per kg.

“The last 12 months of running is less than a dollar,” he said, emphasizing that the graphene production is not subsidizing the hydrogen.

“Although the value of graphene could make hydrogen a throwaway fuel.”

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US hydrogen developer to raise $1bn in 2023

Avina Clean Hydrogen will need $600m or more of debt and between $200m and $300m of equity. Capital raising talks are focused on the operating company and project level.

Avina Clean Hydrogen, a U.S.-based developer of hydrogen production plants, will seek to raise approximately $1bn, or possibly more, in 2023, CEO Vishal Shah said in an interview.

The company will need $600m or more of debt and between $200m and $300m of equity, Shah said. Capital raising talks are focused on the operating company and project level.

Avina is also in discussions with potential investment bankers, but has not hired anyone yet, Shah said.

“The capital needs for us are going to continue to grow,” Shah said. “We are certainly open to bringing on additional partners.”

Four development projects have offtake agreements in place, Shah said. The first operational plant will open in Southern California next year or early 2024, followed by Avina’s 700,000 mtpa green ammonia project in the Texas Gulf Coast. Additional projects are underway in the Midwest.

Three of those projects, each with offtakers in place, will reach FID in 2023 and need project debt, Shah said.

Avina is engaged with half-a-dozen potential customers and will seek to develop additional projects within that existing footprint.

Renewable energy procurement is also an important concern for Avina; the Texas project alone will require 900 MW of renewable energy to power, Shah said. The company is in offtake discussions with regional IPPs, mostly in solar and battery storage, but could use help with those agreements. Shah declined to name the firm’s legal advisor.

Avina was founded more than three years ago and is principally backed by Hydrogen Technology Ventures, a firm headed by Shah.

An equity raise was completed in early Q4, Shah said, declining to provide details. The company has a “large industrial firm” as a strategic investor that it hopes to announce soon. Looking forward, the company will look for a second strategic investor, as well as project finance.

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