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OCI breaks ground on Texas blue ammonia plant

The Beaumont groundbreaking puts the project on track for production to begin as scheduled in 2025. The project also received its air permit from the Texas Commission on Environmental Quality on 1 December.

Netherlands-based OCI N.V. has started construction its Beaumont, Texas blue ammonia facility, what currently will be the largest blue ammonia facility to come onstream in Texas, wholly owned by OCI N.V, according to a press release.

Today’s groundbreaking puts the project on track for production to begin as scheduled in 2025. The project also received its air permit from the Texas Commission on Environmental Quality (TCEQ) on 1 December 2022, another significant milestone.

The project’s site is adjacent to OCI’s existing integrated 1.4 million metric ton per year methanol-ammonia production facility in Beaumont and 1.8 million metric ton per year 50%-owned methanol joint venture, Natgasoline, and leverages the significant and growing capabilities that exist in Southeast Texas for blue and green ammonia and hydrogen production. The area already has extensive existing hydrogen pipeline delivery infrastructure, hydrogen storage capability and industrial customers. South East Texas also has a wealth of companies leading in energy technology integration, deployment, operations, and maintenance, and a skilled labor force in clean energy.

Total investment cost for OCI expected to be below $1bn, including spending on upsized utilities and available land to allow for doubling to 2.2 mtpa capacity in the future.

Nassef Sawiris, Executive Chair of OCI N.V. said: “We are delighted that OCI is expanding its already significant presence in South-East Texas, a region which, as a clean energy leader and with its strategic location, plays a key role in the growing low-to-zero carbon hydrogen industry and is one of the best places globally to invest in this area. We look forward to continuing our partnerships with Jefferson County, the City of Beaumont, Beaumont ISD, the special districts, and the State of Texas.”

Ahmed El-Hoshy, Chief Executive Officer of OCI N.V., commented: “The potential for clean ammonia to solve many of our global problems has become increasingly clear. It is not only an essential fertilizer that ensures food security for over 4 billion people, low-carbon ammonia is a clean fuel that provides an ideal solution available today for hard-to-abate sectors such as power and shipping. This world-scale facility will be a significant part of that, resulting in a very significant reduction in carbon emissions equivalent to taking almost half a million cars off the road permanently. The potential here is great and I’m delighted that breaking ground today signifies we’re on track to deliver on that.”

OCI will upgrade “over-the-fence” blue hydrogen to produce blue ammonia, where over 95% of carbon emissions will be captured and sequestered. This allows OCI to materially reduce the carbon intensity of its products for downstream customers along the value chain, resulting in carbon footprint reductions across a wide range of industries including transportation, power, manufacturing and agriculture.

The ammonia plant uses KBR technology and the EP (Engineering and Procurement) contract was awarded to Maire Tecnimont in March 2022.

Blue ammonia is produced from hydrogen derived from natural gas where the C by-product is captured and sequestered. Green ammonia is produced from hydrogen based on renewable sources such as wind and solar rather than fossil fuels. This project has been designed to transition from blue to green ammonia production in the future as green hydrogen becomes available at larger scale.

OCI is also continuing its investments in the future talent of the area. OCI recently announced a $200k donation to the Beaumont Independent School District to develop opportunities to expand STEM education for students, continuing its long-term partnership with the school district.

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Duke to build end-to-end hydrogen facility in Florida

During times of high energy demand, the system will deliver stored green hydrogen to a combustion turbine that can run on a natural gas/hydrogen blend or up to 100% hydrogen.

Duke Energy will break ground in DeBary, Fla., on a demonstration project in the United States to create clean energy using an end-to-end system to produce, store and combust 100% green hydrogen.

The system is the result of collaboration between Duke Energy, Sargent and Lundy, and GE Vernova and will be located at Duke Energy Florida’s DeBary plant in Volusia County, Fla.

“Duke Energy is constantly evolving and seeking ways to provide clean, safe energy solutions to our customers,” said Melissa Seixas, Duke Energy Florida state president in a news release. “DeBary will be home to Duke Energy’s first green hydrogen production and storage system connected to existing solar for power generation, and we are grateful to the city for allowing this innovative technology in their community.”

The system will begin with the existing 74.5 MW DeBary solar plant providing clean energy for two 1 MW electrolyzer units.

Construction of the project will begin later this year and could take about one year to complete. Duke Energy anticipates the system will be installed and fully functioning in 2024.

The resulting oxygen will be released into the atmosphere, while the green hydrogen will be delivered to nearby, reinforced containers for safe storage. During times when energy demand is highest, the system will deliver the stored green hydrogen to a combustion turbine (CT) that will be upgraded using GE Vernova technology to run on a natural gas/hydrogen blend or up to 100% hydrogen. This will be the nation’s first CT in operation running on such a high percentage of hydrogen.

“Duke Energy anticipates hydrogen could play a major role in our clean energy future,” said Regis Repko, senior vice president of generation and transmission strategy for Duke Energy. “Hydrogen has significant potential for decarbonization across all sectors of the U.S. economy. It is a clean energy also capable of long-duration storage, which would help Duke Energy ensure grid reliability as we continue adding more renewable energy sources to our system.”

Readily available hydrogen is a dispatchable energy source, meaning it is available on demand. It can be turned on and off at any time and is not dependent on the time of day or the weather, like sun, wind or other renewable energy sources known as intermittent.

Dispatchable energy provides a needed element of reliability that will enable us to add more intermittent energy sources, yet still ensure we can meet customer demand, even during extended periods of high demand. Using solar energy to generate green hydrogen enables solar plants to be optimized. Relying on intermittent energy sources without available dispatchable energy sources would put our future electric system at risk of having insufficient energy to serve customer demand.

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MHI completes test of ammonia single-fuel burner

Mitsubishi Heavy Industry tests confirmed stable combustion, reduced nitrogen oxide emissions compared to coal firing, and complete combustion of the ammonia.

Mitsubishi Heavy Industries, Ltd. (MHI) has successfully completed a combustion test of an ammonia single-fuel burner as part of its development of ammonia utilization technology for thermal power generation boilers. The testing was conducted using combustion test equipment at the Nagasaki District Research & Innovation Center in Nagasaki, according to a news release.

Utilizing a combustion test furnace with fuel consumption of 0.5 tons per hour (t/h), MHI conducted a single-fuel burner test using an ammonia burner, and a high-ratio ammonia co-firing test with coal. In both cases, the tests confirmed stable combustion, reduced nitrogen oxide (NOx) emissions compared to coal firing, and complete combustion of the ammonia.

In addition to its role as an energy carrier allowing efficient transport and storage of hydrogen energy at low cost, ammonia can be used directly as a fuel for thermal power generation, and because it does not emit CO2 during combustion, is expected to contribute to the reduction of greenhouse gas emissions. This combustion test confirmed that the basic structure of the burner simultaneously provides for stable combustion of ammonia and suppression of NOx emissions, passing an important development milestone for practical application of the technology in thermal power generation boilers.

As a next step, MHI plans to conduct a combustion test using an actual size burner in a larger 4t/h combustion test furnace. Based on these results, MHI will then take steps for application of the burner it has developed for thermal power plants in Japan and overseas.

Since fiscal 2021, MHI has been pursuing “development and demonstration of high-ratio ammonia co-firing technology in coal-fired boilers” as part of the Fuel Ammonia Supply Chain Establishment project conducted by the Green Innovation Fund Project of the New Energy and Industrial Technology Development Organization (NEDO). This combustion test is part of that project, and by fiscal 2024, MHI plans to develop burners capable of ammonia single-fuel firing for both circular firing and opposed firing type burners.

The Nagasaki District Research & Innovation Center, where the test was conducted, is located in Nagasaki Carbon Neutral Park, MHI Group’s development base for energy decarbonization technologies that commenced operations in August this year. With the success of this combustion test, MHI is accelerating the development of related technologies for practical application in thermal power generation boilers (Note) in Japan and overseas.

MHI Group will continue to propose new solutions that make use of its many proven technologies, including the use of ammonia, which is one of the most promising solutions for reducing CO2 emissions, and promote the energy transition.

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Sumitomo and Hoegh Autoliners studying ammonia bunkering

The parties have signed an LOI to study the supply of clean ammonia as a bunker fuel at the ports of Singapore and Jacksonville, USA from 2027 onwards.

Sumitomo Corporation and Höegh Autoliners have signed a Letter of Intent to collaborate on the supply and delivery of clean ammonia as a next-generation sustainable maritime fuel for Höegh Autoliners’ upcoming Aurora Class PCTC vessels.

The twelve state-of-the-art vessels are set to become the largest and most eco-friendly car carriers ever built, with the capability to run on zero-carbon ammonia or carbon-neutral methanol, according to a news release.

Under the agreement, the parties will look into the supply of clean ammonia as a bunker fuel at the ports of Singapore and Jacksonville, USA from 2027 onwards.

Moving forward, the companies will embark on a comprehensive evaluation of the compatibility between the PCTC vessels and the ammonia bunkering facilities at the identified bunker ports. They endeavor to make necessary adjustments to specifications for both “shore-to-ship” and “ship-to-ship” bunkering operations and undertake safety assessments to establish standardized operational protocols and regulations in close coordination with pertinent government agencies.

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London-based hydrogen fund expanding in US

A UK-based investor in early-stage hydrogen companies has completely allocated its first two funds and is looking to grow its presence in the US.

AP Ventures, the London-based venture capital and private equity firm, will need new advisory relationships and offices in the US as it looks for investors and deployment opportunities there, Managing Partner Andrew Hinkly said in an interview.

The company has fully allocated its first two funds with 12 LPs, Hinkly said.

Fund 1 ($85m) is fully deployed with two of the LPs. Two realizations have come from that fund to date: the sale of United Hydrogen Group in Tennessee to Plug Power and the sale of Hyatt Hydrogen to Fortescue Future Industries.

Fund 2 ($315m) is fully allocated with 12 LPs, including the two from Fund 1. The portfolio includes 21 companies across the hydrogen value chain (ammonia for transport, liquefaction, electrolyzer production, compressor technology, etc.) at the seed, Series A and Series B stages.

“We believe we have a very differentiated set of capabilities and experiences because we are singularly focused on the hydrogen value chain,” Hinkly said.

The firm’s LPs include AngloAmerican, Equinor, Implats, Mitsubishi, Nyso Climate Investments, Pavilion Capital, Plastic Omnium, Public Investment Corporation, Sparx, Sumitomo, and Yara International.

Strategic advice need apply

In the near-term AP Ventures can offer deal flow, opportunities within portfolio companies for various professional services, and an understanding of the progression of hydrogen businesses for later-stage investors, Hinkly said.

Transactions to date have been conducted bilaterally with external legal counsel, Hinkly said. AP Ventures has yet to engage a financial advisor for that purpose.

“If you want to know about hydrogen and hydrogen deal flow, AP Ventures sees most of it,” Hinkley said. “We bring with us an ecosystem of fairly regular co-investors who are similarly interested in hydrogen.”

Co-investors include Amazon, Mitsuibishi, Chevron and Aramco.

Some of the firm’s more mature companies will take on strategic consulting services as they prepare for larger fundraising, Hinkly said.

“Clearly there are a series of advisory services that our portfolio companies require as they raise capital or subsequently look to acquire or be acquired,” he added.

Later-stage investors are keen to understand the development of AP’s portfolio, Hinkly said. Topco equity and larger-scale infrastructure investors have collaborative relationships with the firm as they prepare to acquire its portfolio companies in the future.

“We have a common interest in the continued development and maturity of the companies we’re investing in,” Hinkly said. “We have an ever-increasing roster of later-stage private equity investors who have a desire to maintain a dialog with us and to be introduced to our portfolio companies on a regular basis.”

New world opportunities

US portfolio companies could be in greater need of strategic advisory services in the near term than some of AP’s European holdings, Hinkly said.

The firm is looking to establish offices in the US with an eye on Denver and Houston, Hinkly said.

Greater support for hydrogen in the US under the IRA means European companies within AP Ventures’ portfolio are also looking to establish themselves in the US.

In terms of a target market, AP Ventures is particularly interested in Texas, which Hinkly said he expects will be the hydrogen capital of the world. Existing infrastructure, human capital and enormous wind and solar resources pair well with a willingness to build out the industry there, he said.

AP will continue investing in the full hydrogen value chain as it has been for years, identifying weak spots in the chain to strengthen the industry, Hinkly said. But moving forward, the firm would like to invest in carbon capture utilization and storage as well.

Scaling up with the industry

As the hydrogen industry grows and its portfolio companies scale, there is significant opportunity for AP Ventures to grow and provide more financing, Hinkly said.

“There is a huge requirement for capital and we are knowledgeable, very knowledgeable, of where good opportunities exist,” he said.

The nature of the firm’s early contracts gives them preferential access to those opportunities in some cases as well. Whether that would be best done directly with a new fund or partnership with a firm with complementary skills is an open question.

“That strategic question is one that’s frankly ahead of us this year.”

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IPP retains banker for California plant sale

An independent power producer has retained a banker for a sale of a decades-old gas plant in California. Aging gas plants have been in the sights of clean fuels developers looking to retrofit or use facilities for clean fuel production and combustion.

GenOn, an independent power producer, has hired Solomon Partners to sell a 54 MW gas plant in California, according to sources familiar with the matter.

The plant, Ellwood, is located in Goleta, in Santa Barbara County, and was shuttered and retired by GenOn as of 2019. It reached COD in 1973 and ran two Pratt & Whitney FT4C-1 gas turbine engines.

Ellwood previously interconnected via Southern California Edison, a utility that is pursuing multiple natural gas decarbonization projects, including a hydrogen-blending initiative with Bloom Energy.

A teaser for the sale of Ellwood, which was issued last week, notes there is an opportunity to install a battery energy storage system at the site, one of the sources added.

Elsewhere in California, investment firm Climate Adaptive Infrastructure and developer Meridian Clean Energy are seeking to demonstrate decarbonization in peaker plants at the much newer gas-fired Sentinel Energy Center. Their plans include hydrogen blending.

GenOn declined to comment. Solomon Partners did not respond to requests for comment.

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3Q deals in focus: Macquarie’s investment in Atlas Agro

In one of the largest and most compelling clean fuels deals of 3Q23, Macquarie made a $325m investment into Americas-focused Atlas Agro, a developer of industrial-scale green nitrogen fertilizer plants that utilize green hydrogen as a feedstock. William Demas, head of Macquarie Asset Management Green Investments in the Americas, provides a closer look.

Macquarie Asset Management’s investment into green nitrogen developer Atlas Agro gives the manager a stake in the company along with the ability to invest in the developer’s projects.

The $325m investment, made via the Macquarie GIG Energy Transition Solutions fund, will benefit Atlas Agro’s previously announced fertilizer plant project in Richland, WA, and will also support the company’s global pipeline of green fertilizer facilities, according to William Demas, head of Macquarie Asset Management Green Investments in the Americas.

In addition to the 700,000 tons-per-year Richland project, Atlas Agro is pursuing a project in Minas Gerais, Brazil that will produce 500,000 tons per year. Both projects would make nitrate fertilizer and are estimated to cost $1bn. An additional facility is planned for the US Midwest.

In the production process, the plants utilize air, water, and renewable electricity as the only raw materials.

“There are a number of things that attracted us to Atlas Agro,” Demas said in response to written questions. “They have a strong management team with an established track record managing established companies and delivering projects in the fertilizer space.”

The GIG Energy Transition Solutions fund has a target size of approximately $1.9bn, which to date is just over 50% committed, according to a source familiar with the fund.

Next phase

Equally important for the Atlas investment, Demas added, is that the company is aligned with Macquarie’s next phase energy transition thesis in the US – in this case hydrogen. 

“In this application, green hydrogen will be used as a feedstock rather than as an energy carrier, and the end-product of green fertilizer will attract customers looking to enter into long-term offtake contracts,” he said.

Through the development of plants in Washington state and the US Midwest, Atlas Agro is seeking to take advantage of favorable logistics to displace the need for imported fossil-fuel based fertilizer. Brazil also imports around 95% of its nitrogen fertilizers, according to Atlas.

“An important benefit of Atlas Agro’s model is the availability of locally produced, high-quality fertilizer, eliminating many of the issues associated with international supply chains,” Demas said, noting that offtakers are local to Atlas Agro’s operations.

Further, Macquarie and Atlas plan to pursue a project finance model for funding the projects under development.

“As an infrastructure investor, we focus on opportunities that are bankable, which means, ultimately project financeable,” Demas said. “We backed Atlas Agro because we believe their approach to project development, commercialization, construction and operations aligns with our views on how to underwrite infrastructure investments.”

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