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OCI Global hires advisors for strategic review

Dutch chemicals producer OCI Global has hired advisors to explore potential asset monetizations. It is also in talks with offtakers that could take an equity stake in its Texas blue ammonia project, with strong demand spurring the company to evaluate an expansion at the site.

OCI Global has retained advisors as part of its strategic review to explore potential asset monetizations, CEO Ahmed El-Hoshy said today.

The aim of the asset sale exploration is to bridge the gap between the combined value of the individual assets in the company’s portfolio and the discount on holding company shares, El-Hoshy said.

The decision to pursue the asset sales came after “constructive dialog” with Inclusive Capital, he said, an activist shareholder that has been pushing for the dispositions.

OCI CFO Hassan Badrawi added that he expected to provide an additional update before the end of the year, and that there was “strong interest in the active discussions.”

In the meantime, OCI is exploring adding a second line at its Texas blue ammonia project, a 1.1 mtpa facility under construction in Beaumont, Texas. 

“We’re currently in advanced discussions regarding long-term offtake and potential equity participation, reflecting strong commercial interest and an increasing appetite from strategics to pay a premium to secure long-term low-carbon ammonia, given regulatory scores,” El-Hoshy said.

Any further expansion at the site will benefit from enhanced project economics, with cost benefits deriving from an early-mover advantage, as well as the ability to leverage existing infrastructure and utilities, El-Hoshy added.

“With this in mind – and against the backdrop of a positively evolving regulatory environment – we are prudently evaluating a second line at the site to capitalize upon anticipated demand,” he said, noting that the expansion would bring its clean fuels capacity in total to 2.8 million tons.

“With the incentives that are being provided for the utility space and the power space in Japan and Korea, there is, for many of the offtakers, a requirement to have an equity participation in the low-carbon ammonia,” El-Hoshy said.

The strategic investors could come with lower return requirements, allowing for a higher premium for the transfer of equity in the project, he said.

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Technology in focus: Drilling down on geologic hydrogen

Some three decades after accumulations of geologic hydrogen were first discovered, investors and federal regulators are starting to pour resources into figuring out how to extract it – and make it profitable, Bianca Giacobone reports.

What if, instead of extracting oil and gas from the ground, we could extract hydrogen, and tap into what was likely the original energy source for life on Earth to solve the net-zero problem for the future?

Geologic hydrogen is naturally occurring hydrogen that exists in subsurface deposits and has all the net-zero properties of the green hydrogen the clean fuels industry is laboring to produce. Also known as white hydrogen or natural hydrogen, it was discovered with a flare of it caught fire in Mali, in 1987. But only recently, amid the hunt for as many renewable resources as possible, have money movers started paying attention.

In February, Koloma, a geologic hydrogen start-up, announced it had raised over $245m in Series B funding from investors such as Breakthrough Energy Ventures, United, and Amazon’s Climate Pledge Fund. And the U.S. Department of Energy awarded $20m to 16 projects exploring the topic through ARPA-E, the agency that supports the research and development of high-risk, high-reward energy technologies.

The same month, Pete Johnson, Koloma’s CEO, testified at a dedicated Senate Committee on Energy and Natural Resources hearing. “Geologic hydrogen is domestic primary energy,” he said. “All other forms of hydrogen require more energy to produce than the hydrogen itself holds. But geologic hydrogen is a source of energy.”

High risk, high reward

Given the amount of resources going into establishing myriad types of hydrogen production around the world, it could be more convenient to drill and extract hydrogen from the ground – a resource that is plentiful, if hard to estimate, according to scientists.

“If we look at the most probable value, it’s maybe 5 million megatons” said Geoffrey Ellis, who leads the U.S. Geological Survey’s research on geologic hydrogen resources, referring to the unit for one million metric tons. “Just a small fraction of that, one or two percent, could actually provide all of the hydrogen that we would need to get to net zero for hundreds of years.”

The related technology and research is in its early stages – something that was reiterated multiple times during the February Senate hearing – but it could be prime time for investors with an appetite for high risk-high reward investments.

The first exploratory well was drilled in Nebraska in 2019 by the start-up Natural Hydrogen Energy, and since then the number of companies active in the space has grown from two to around 50, according to data collected by Viacheslav Zgonnik, a geochemist and CEO of Natural Hydrogen Energy.

“Most of the areas where we estimate there is hydrogen are available,” said Zgonnik. “So right now it's a good moment to invest for cheap.”

By the end of the year, the U.S. Geological Survey plans to release an initial map with the best locations to start doing more detailed geologic hydrogen exploration in the United States, and ARPA-E plans to have a completed GREET model for GHG life cycle analysis, which is expected to confirm geologic hydrogen’s low GHG emissions and qualify it for 45V tax credits.

According to sources active in the space, the tax credits are essential to kickstart a new geologic hydrogen industry that, like most new industries, is bound to have some uneconomical moments in its early stages. Indeed, a group of geological hydrogen producers co-signed a comment letter to the US Treasury as part of the 45V rulemaking process, urging the adoption of geologic hydrogen within the 45VH2-GREET model and a “predictable and speedy” process for determining provisional emissions rates for hydrogen production technologies that are not represented in the model.

Dig deeper

Preliminary data by the U.S. Geological Survey suggests that hydrogen could be in some areas along the East coast of the United States, as well as on the mid-continental rift (Kansas, Nebraska, Iowa, Minnesota up into Canada and then down into Michigan) and much of the Pacific Northwest, according to Ellis.

That’s where iron rich rocks known as ultramafic can be found, which, when hit with water, produce hydrogen gas.

“Ultramafic rocks are currently known to produce significant hydrogen,” said Tucker Ely at 39 Alpha Research, one of the teams that received ARPA-E funding. “But the Earth's surface maintains a large diversity of other rocks with hydrogen-producing potential, and we will be exploring many of these in this project.”

Ultramafic rocks, however, are, for the most part, on ocean floors, which are hard and expensive to access. 39 Alpha Research specializes in mathematical techniques that determine how much hydrogen is contained in different compositions of rock and water, hoping to find the most economical system and provide guidance to companies on where to drill their wells.

The nonprofit’s interest in geologic hydrogen was spurred by projects for producing hydrogen funded by NASA.

“It's wild that NASA was funding research to understand the solar system and other worlds, and that the tools we made along the way are going to help us understand an alternative fuel source and really drive a clean energy transition,” said Cole Mathis at 39 Alpha Research.

Which rocks, which fluids, where, the presence of geologic hydrogen accumulations large enough to be commercial, and what the production rates will look like are some of the many unknowns that make geologic hydrogen a risky scenario for investors.

“The only way to answer those questions is to drill,” said Zgonnik. “And the only way to drill the wells is for investors to fund the drilling. We don't have much time and natural hydrogen can give us speed, because we can leverage existing infrastructure from oil and gas industries.”

In addition to Natural Energy Hydrogen’s exploratory well in Nebraska, companies like Koloma and HyTerra have also started drilling in the Midwest the past couple of years, the latter through its Project Nemaha, in Kansas, which could produce between 111,738 and 565,390 tonnes of hydrogen, according to a prospective resource assessment released in December 2023.

For the project, the assessment also estimated between 37 and 1,629 million metric cubic feet of recoverable helium, a gas that can be found with hydrogen, and is 25 times more expensive by unit of volume, a strong economic incentive for hydrogen exploration.

Even if it all ends up not working out in the end, scientists say its potential is enough to dig deeper.

“Last time we developed a new source of energy was 100 years ago with nuclear energy,” said Zgonnik. “This is something else, it’s something new, an additional source of primary energy, of which there are a very limited number.”

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BayoTech appoints new CFO

BayoTech has appointed Jeff Wood as its new CFO.

BayoTech, a provider of hydrogen production and transportation solutions, has appointed Jeff Wood as its new chief financial officer (CFO).

With a wealth of experience spanning 25 years in the energy value chain, Jeff is a highly skilled finance executive who brings to the role vast expertise in strategic planning, financial analysis, and capital raising, according to a news release.

Jeff has served as CFO for three public companies over a decade, including his most recent role as President and CFO of Black Stone Minerals, the largest publicly traded mineral and royalty company in the US. Prior to that, Jeff was the SVP and CFO of Eagle Rock Energy Partners until its acquisition, and served as a private company CFO for Siluria Technologies, a technology company that produces fuels and chemicals from natural gas.

Earlier in his career, Jeff was SVP and Portfolio Manager for Lehman Brothers Investment Management division, where he managed over a billion dollars and raised over $400m in capital. Before that, he was in Lehman Brothers’ Investment Banking division, where he led the execution of numerous initial public offerings, follow-on equity offerings, and debt issuances. Jeff started his career with PricewaterhouseCoopers in the audit and compliance advisory practice.

“I’m delighted to welcome Jeff Wood into BayoTech’s executive leadership team,” said BayoTech President and CEO Mo Vargas. “Jeff is an experienced leader in the energy sector who will bring strategic depth and strong oversite to BayoTech as the organization fully commercializes the deployment of BayoTech Hydrogen Hubs. He is a fantastic leader and person and will be a great cultural fit for BayoTech.”

“I am excited to be part of such a dynamic and innovative company,” Jeff Wood adds. “As the market for hydrogen expands, investor interest in hydrogen-related projects is rapidly increasing. I look forward to working with the team to drive growth and create value for BayoTech’s stakeholders.”

BayoTech’s current CFO, Wendy Rollstin, is retiring but will remain available until year-end to ensure a smooth transition. During her five-year tenure as CFO, Wendy was instrumental in shaping BayoTech’s go-to-market strategy, building scale, and accelerating growth by securing more than $160m in equity investments.

“I want to thank Wendy for her dedication to BayoTech as not only CFO but a great business partner who leaves a strong impact on the company,” said Mo Vargas. “On a personal note, she’s been a trusted adviser to the Board and me; we will miss her partnership and wish her all the best in what will be an exciting and active retirement.”

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DOE issues advanced funding notice: $2.5bn for carbon capture

The DOE intends to provide up to $2.52bn to fund two carbon capture programs needed to reduce carbon emissions from the electricity generation and industrial sectors

The U.S. Department of Energy’s (DOE) Office of Clean Energy Demonstrations (OCED), in collaboration with the Office of Fossil Energy and Carbon Management (FECM), intends to provide up to $2.52bn to fund two carbon capture programs needed to reduce carbon emissions from the electricity generation and industrial sectors, according to a news release.

Established by President Biden’s Infrastructure Investment and Jobs Act, both the pilot and demonstrations programs will help drive the demonstration and deployment of carbon management technologies critical to addressing the climate crisis and meeting the nation’s goal of net-zero emissions by 2050, while also protecting industrial jobs and boosting job creation in communities across America.

Carbon capture represents an addressable market of nearly $100 billion by 2030 and $600 billion by 2050 just in the United States,” said Office of Clean Energy Demonstrations Director David Crane. “The nearly $5 billion of carbon capture pilot and demonstration projects that will be directly enabled by these two programs, together with the carbon tax credits authorized in the Inflation Reduction Act, will catalyze the commercial wave essential to a clean energy transition, which ensures safe, affordable, and reliable energy to the American consumer and empowers workers in every pocket of the country.”

Since the electricity generation and industrial sectors account for a significant portion of our nation’s carbon emissions, carbon capture, utilization, and storage (CCUS) is a critical component of reducing emissions and meeting our climate and energy transition goals. For the United States to reach net-zero emissions by 2050, CCUS will need to scale to potentially as much as 100 times today’s levels. Growth of this magnitude represents an exciting technological challenge and an extraordinary economic opportunity.

OCED’s role is to de-risk these transformational technologies and catalyze private sector investment through public-private cost share agreements. The Carbon Capture Large-Scale Pilots program will include up to $820 million for up to 10 projects focused on scaling transformational carbon capture technologies. The Carbon Capture Demonstration Projects Program will include up to $1.7 billion for approximately six projects to demonstrate commercial-scale carbon capture technologies, pipeline transportation, and geologic storage infrastructure. The pilot program seeks to catalyze earlier stage technologies with great potential, while the demonstrations program will focus on technologies that will further commercialization.

DOE understands, and intends to address, the concerns of frontline communities and environmental justice and climate organizations about how CCUS projects may negatively affect those communities, local environmental quality, and the overall climate mitigation efforts if not developed with appropriate safeguards. That is why applications to both funding announcements will require a tailored Community Benefits Plan discussing, among other areas, community and labor engagement; investing in the American workforce; diversity, equity, inclusion, and accessibility; and the Justice40 Initiative. This will enable and advise future activities with the intent of developing community-informed projects to support the cost-effective, efficient, equitable, and environmentally responsible at-scale expansion of CCUS operations to enable industry adoption.

DOE plans to release both funding announcements in late February 2023.

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Exclusive: Pan-Atlantic developer planning e-methanol project in West Texas

A clean fuels developer with projects on both sides of the Atlantic is pursuing an e-methanol project in West Texas with an estimated cost of between $800m – $900m.

Green fuels developer ETFuels is planning an e-methanol project in West Texas.

Following the blueprint of projects in development in Finland and Spain, ETFuels has leased land and the Lone Star State is in the early stages of determining the feasibility of the project, which would require between 300 MW – 500 MW of renewables, Director Patrick Woodson said.

Depending on the ultimate size of the project, it would cost between $800m – $900m and produce 80,000 to 120,000 tons per year of e-methanol on site, he said, which would then be trucked to end markets.

“We like the modularity of projects of that size,” he said, noting “more optionality to bring projects to market.”

Woodson, the former CEO and Chairman of E.ON Climate & Renewables, a renewables developer, said ETFuels would develop the renewables portion of the project internally.

The company is still exploring likely target markets for the e-fuels, but Woodson noted that they perceive robust demand for green methanol from the shipping industry.

“We understand the decarbonization challenges faced by the shipping industry are significant, with question marks over pricing and supply availability at scale, and we are addressing these head-on,” ETFuels CEO Lara Naqushbandi said in a news release last year.

ETFuels attracted financial backing last year from France-based SWEN Capital Partners, with Green Giraffe providing financial advisory services.

For its Spain project, the company is developing a 100,000 ton green methanol plant, including 420 MW of solar PV and 120 MW of onshore wind capacity powering 220 MW of electrolyzers.

It expects to take a final investment decision on the Spain project by 2025, with production anticipated for 2028, according to the company website.

ETFuels as a third project in development in Finland, powered by “relentless” Arctic winds.

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Air Products CEO discusses mega-scale green hydrogen project with AES

Air Products CEO Seifi Ghasemi further discussed its JV with AES Corporation to develop a $4bn green hydrogen project in Texas, noting that roughly half the price tag would come from developing 1.4 GW of renewables to feed the electrolyzers.

Air Products and AES Corporation will form a JV to develop a $4bn integrated green hydrogen facility in Texas, with roughly half of the cost coming from development of 900 MW of wind and 500 MW of solar generation, and the other half for the hydrogen build-out, Air Products CEO Seifi Ghasemi said on an investor call today.

Similar to his company’s JV in Saudi Arabia, the 50/50 JV will develop, build, own and operate a facility in Wilbarger County, at the site of a decommissioned coal-fired plant, Ghasemi said on the call.

Air Products has an exclusive global agreement with thyssenkrupp for electrolyzers, and could include battery storage at the Texas site to help power the electrolyzers, he added.

A separate entity owned 100% by Air Products will be the sole offtaker from the facility, Ghasemi said, which will produce more than 100 mtpd for use in transportation and industrial markets.

The relationship between AES and Air Products is not exclusive, he said.

Air Products expects a minimum internal rate of return of 10%, Ghasemi said. The company is hoping the tax benefits of the project will result in a lower hydrogen price from the JV.

The amount of capital invested by Air Products will be determined by downstream uses, Ghasemi said. The company has yet to decide if it will build a liquefaction plant, transport gaseous hydrogen by pipeline, or convert the hydrogen to ammonia and ship it by rail.

When it was noted that there is not an existing pipeline connecting Wilbarger County to Air Product’s Gulf Coast pipeline, Ghasemi said he was being pressured to get more deeply in the topic than he wanted, but that the company was confident emerging industry in the area would provide the necessary offtake.

“We don’t have to send it all the way down 250 miles to our existing pipeline,” Ghasemi said. “There’s a lot of different options.”

Air Products will not issue new stock to dilute shareholders or jeopardize its A-rating, Ghasemi said.

The labor cost is “very low on these projects,” Ghasemi said. And customers are attracted to getting 30-year contracts not associated with the price of oil, natural gas or geopolitics.

Air Products is investing approximately $500m for a 35 metric ton per day facility to produce green liquid hydrogen at a greenfield site in Massena, New York, as well as liquid hydrogen distribution and dispensing operations.

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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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