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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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Carbon removal firm spins out of UCLA contracted with Boeing

Equatic has a pre-purchase agreement with Boeing for its carbon-negative hydrogen and currently operates two carbon removal pilots in Los Angeles and Singapore.

Carbon removal company Equatic recently spun out from the UCLA Samueli School of Engineering’s Institute for Carbon Management to deploy the first technology combining CO2 removal and carbon-negative hydrogen generation, according to a news release.

Alongside the launch, Equatic is announcing that it has entered into a pre-purchase option agreement with Boeing, a leading global aerospace company. Under the agreement, Equatic will remove 62,000 metric tons of carbon dioxide and will deliver 2,100 metric tons of carbon-negative hydrogen to Boeing.

“The oceans are the world’s largest reservoir of carbon dioxide. One quarter of the world’s daily CO2 emissions are drawn down into the ocean,” the release states. “Equatic’s technology accelerates and amplifies this natural cycle to remove and durably store CO2. The entire removal and sequestration process happens within the boundaries of an industrial carbon removal plant, enabling Equatic to precisely measure CO2.”

Equatic currently operates two carbon removal pilots in Los Angeles and Singapore. One hundred percent of the CO2 removed from these pilots has been pre-sold, including via pre-purchase agreements with global payment solution provider, Stripe.

Equatic expects to reach 100,000 metric tons of carbon removal per year by 2026 and millions of metric tons of carbon removal for less than $100 per metric ton by 2028.

“Furthermore, Equatic will become a dominant producer of carbon-negative hydrogen — hydrogen created from processes that reduce atmospheric CO2,” the release states. “The hydrogen will be sold as a clean energy source to decarbonize industrial processes, produce electricity for the transportation sector, create Sustainable Aviation Fuels (SAFs) and fuels for trucking, and power the Equatic technology itself.”

Equatic emerges from UCLA with over $30m in initial funding including grants and equity investments from organizations such as the Chan Zuckerberg Initiative, the Anthony and Jeanne Pritzker Family Foundation, the Grantham Foundation for the Protection of the Environment, the National Science Foundation, YouWeb Incubator, The Nicholas Endowment, Singapore’s Temasek Foundation, PUB: Singapore’s National Water Agency, and the U.S. Department of Energy’s Office of Fossil Energy and Carbon Management, and the U.S. Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E).

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Raven SR raises $15m, makes board appointments

Ascent Funds led the latest $15m investment into the renewable fuels firm, with contributions from existing investors Chevron New Energies, ITOCHU Corp. and Stellar J Corp.

Raven SR Inc., a renewable fuels company, has board additions and an executive promotion, coupled with securing $15m in new investments.

The company said the latest fundraising underscores the confidence in Raven SR’s proprietary Steam/CO2 Reforming technology that converts various waste streams into renewable transportation fuels like hydrogen and sustainable aviation fuel (SAF). The process outperforms all known alternatives in efficiency, producing more hydrogen and SAF per ton of waste, according to the company.

In August, 2021, Raven closed on a $20m strategic investment from Chevron U.S.A., ITOCHU Corporation, Hyzon Motors Inc. and Ascent Hydrogen Fund. Samsung Ventures made a strategic investment earlier this year, allowing the company to expand into the Asia-Pacific market.

In 2022 it launched a Series C funding round led by Barclays and BofA Securities.

In addition to today’s funding milestone, Raven SR said Stuart McFarland, former CFO of Fannie Mae, has been appointed chairman of the Board of Directors, with Mark Gordon, chief investment officer of Ascent Funds, as vice chairman.

Named as new board members: Justin Heyman, managing director of RockCreek Group, and Robert Kinghorn, founder and CEO of Stellar J Corp. Matt Scanlon, the current CFO, has been promoted to president and interim CFO.

Ascent Funds, a venture capital fund dedicated to advancing the energy transition, led the latest $15m investment, with contributions from existing investors Chevron New Energies, ITOCHU Corp. and Stellar J Corp., the engineering, procurement and construction company managing construction of Raven SR’s hydrogen project in Richmond, California.

“Raven SR is pleased to have the continued and enhanced support of our investors as we move toward construction of our organic waste-to-hydrogen facility,” said Matt Murdock, founder and CEO of Raven SR. “This funding is crucial for finalizing our production setup, and the expanded board strengthens our team for the next phase.”

McFarland said he was honored by the board’s trust in his leadership and is looking forward to teaming with Murdock as they move the company ahead. McFarland also acknowledged the support from shareholders and the dedicated project team, emphasizing their importance in Raven SR’s journey.

“With this solid foundation, 2024 is shaping up to be a landmark year for Raven SR as it commercializes its Steam/CO2 Reforming technology to bring clean and sustainable fuel to the world,” said McFarland.

Raven SR’s unique process is non-combustion and catalyst-free as verified by the California EPA. The Richmond project is the first and only California Environmental Quality Act-permitted biomass-to-hydrogen facility in the state.

The Steam/CO2 Reforming technology diverts waste from landfills, produces a carbon-negative fuel and ensures a low carbon footprint compared to traditional hydrogen production methods, placing Raven at the forefront of the waste-to-hydrogen sector.

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HIF, Idemitsu, and MOL to cooperate on e-fuels supply chain

HIF Global will assess demand for CO2 in its eFuels production facilities around the world. Idemitsu will study the capture of CO2 in Japan. MOL will examine the transportation and shipping of CO2 from Japan and eFuels to Japan.

HIF Global, an eFuels company, Idemitsu Kosan, the Japanese petroleum company and Mitsui O.S.K. Lines, Ltd. (MOL), the international shipping company, have reached an agreement to develop an eFuels supply chain between HIF facilities and Japan.

The agreement also outlines how the companies will explore the potential for supplying carbon dioxide (CO2) from Japan for use as a feedstock for the eFuels production process in HIF facilities under development in the USAAustralia and Chile, according to a news release.

HIF Global will assess demand for CO2 in its eFuels production facilities around the world. Idemitsu will study the capture of CO2 in Japan. MOL will examine the transportation and shipping of CO2 from Japan and eFuels to Japan.

Cesar Norton, President & CEO of HIF Global, said: “At HIF Global, we are developing a portfolio of eFuels facilities that would recycle approximately 25 million tonnes per year of CO2, equivalent to the emissions from over 5 million cars. Carbon neutral eFuels are an immediate replacement for fossil fuels across the global transport sector. Initiatives like this collaboration will bring us a step closer to fueling our world with renewable energy as we strive towards net zero emissions now.”

Hiroshi Tanaka, General Manager (Carbon Neutral Transformation Department) of Idemitsu Kosan said: “As part of our commitment to sustainability, Idemitsu is actively working towards establishing a robust supply chain for eMethanol and eFuels. We recognize the importance of these low environmental impact alternatives in our business and their versatility. Through strategic collaborations such as this, we are confident in our ability to take a leading role in reducing carbon emissions in both the energy and transportation sectors. Additionally, we see tremendous potential in the development of various business opportunities within the supply chain. We look forward to exploring and capitalizing on these opportunities together.”

Hirofumi Kuwata, Senior Managing Executive Officer of MOL, said: “Mitsui O.S.K. Lines is pleased to be working with HIF Global and Idemitsu Kosan to develop a value chain for CO2, synthetic fuel, and synthetic methanol, contributing to decarbonization throughout the lifecycle. We will establish efficient maritime transport of CO2, synthetic methanol, and synthetic fuel within the supply chain connecting Japanese and overseas projects.”

The parties will also discuss the sale and purchase of eFuels and analyze the resulting greenhouse gas emissions reduction.

eFuels are made using electrolyzers powered by renewable energy to separate hydrogen from oxygen in water. The green hydrogen is combined with recycled carbon dioxide to produce carbon neutral eFuels, which are chemically equivalent to fuels used today and can therefore be dropped-in to existing engines without requiring any modifications.

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US gas compression firm raising $432m

A Houston-based CNG company is raising money to develop a virtual marine pipeline between the US Gulf Coast and the Caribbean.

Andalusian Energy, a natural gas compression, export and transportation company, is undergoing a $432m capital raise to develop and build a compression and filling station in Plaquemines Parish, Louisiana and export line to Honduras, according to two sources familiar with the matter.

Whitehall & Co. is advising on the transaction, the sources said. Capital allocation will also support the purchase of CNG containers and destination port improvements in Puerto Cortes, Honduras.

Targeted initial equity is $168m, or 40%, according to a teaser seen by The Hydrogen Source. Targeted COD of the project is 2H25.

Gross-cumulative investment could exceed $2bn. The phase I estimated project cost of approximately $421m is expected to be split 40% to permanent equity capital ($168m) and 60% to structured debt ($253m).

Andalusian uses lightweight composite cylinders to ship compressed natural gas (CNG) at ambient temperature to the Caribbean, Central America and eastern Mexico. Marketing materials state the process is lower cost than shipping liquefied natural gas (LNG).

The company has installed a demonstration facility in Choloma, Honduras to import natural gas from CNG.

The Louisiana compression facility will be constructed with two adjacent docks and a site with utility connections. Natural gas will be supplied using a combination of regional pipeline networks including Southern Natural Gas pipeline and High Point Gas Transmission Pipeline. An agreement has been reached to provide interconnection and construction of a 1.5 mile lateral.

Andalusian completed its development capital raise with a strategic investment by MAN Energy Solutions USA, a division of Volkswagen AG, and equity investments by HBG, Progressive Energy and Grupo IDC.

Additional marine engineering, consulting, and ship classification services are being provided by DNV GL and confirmed by the Norwegian Maritime Authority.

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Green hydrogen developer in exclusivity with new investor

New York-based green hydrogen developer Ambient Fuels is in exclusivity with a new investor, with proceeds from the capital raise slated to fund project development and acquisitions.

Ambient Fuels, the New York-based green hydrogen developer, is in exclusivity with a new investor for a bilateral capital raise, CEO Jacob Susman said in an interview.

Susman declined to name the private equity provider but said the backing will allow Ambient to develop several projects, as well as acquire projects from other developers. The deal is proceeding without the help of a financial advisor.

Once the company reaches its run rate, Ambient plans to complete three to four projects per year costing $50m and up, Susman said, with the first expected to reach operation in 2025.

The company’s initial geographic focus is on the Gulf Coast, centered on the Port of Corpus Christi, Susman said. New York, California, the Pacific Northwest and traditional wind energy states in the Midwest and West are areas of additional work.

Hydrogen hubs

Ambient is closely following the DOE hydrogen hub applications process, Susman said. Which regions are awarded funding could make a difference for where the company locates new projects.

According to ReSource‘s project tracker, Ambient is involved in at least two of the hubs that were encouraged by the DOE to submit a final application: California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), and the Port of Corpus Christi Green Hydrogen Hub.

In 2021 Ambient completed a funding round led by SJF Ventures. Several other VC funds and angel investors also participated.

Open for offtake business  

Ambient is looking for offtakers in industries that use the molecules for feedstock and energy but need to meet decarbonization targets.

The company is working to provide hydrogen as an industrial feedstock and energy source to sectors including transportation, oil and gas, mining, glass and steel production and automobile manufacturing. Supplying hydrogen for ammonia fertilizer is another target market.

Advisors with clients in those industries should reach out to Ambient, Susman said.

M&A strategy

Ambient strives to be a fully integrated devco with the resources, capital and expertise to take a project to fruition, Susman said. Projects developed by smaller companies can look to Ambient as a buyer for their projects.

“We want to be a home for those great projects that are being developed independently,” Susman said. “Absolutely we will be acquiring projects.”

Smaller developers with good projects could also be targets for takeover with the backing from the new investor, Susman said. The firm could also make a technology buy in software for project development, operations, or possibly the equipment side, though Susman said there’s a low probability of that.

Financial advisors that have leads on good projects Ambient can acquire are welcome to pitch, Susman said.

Susman said he is not in a hurry to exit Ambient and can see the company being independently financed for years to come.

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Pharma and fuels tech provider could be ready for public listing

International biotechnology firm Insilico Medicine is applying the algorithms that produce novel drugs to synthesizing more sustainable petrochemical fuels and materials.

Insilico Medicine, a global biotechnology firm serving the pharmaceutical and carbon-based energy industries, could be ready for a public listing in the next phase of its corporate evolution.

Insilico, founded in Baltimore and now based in Hong Kong, has raised about $400m in private capital to date and is in the position of a company that would be exploring a public listing in the US and Hong Kong, CEO Alex Zhavoronkov said in an interview. He declined to say if he has hired a financial advisor to run such a process but said a similar company in his position would have.

The generative AI platform that the company uses to produce novel drugs can be applied to produce more sustainable carbon-based fuels, Zhavoronkov said. The objective is to maximize btu and minimize CO2, making the fuels burn longer and cleaner.

Saudi Arabia’s state oil company Aramco is a user of the technology and participated in Insilico’s $95m Series D (oversubscribed and split between two sub-rounds) last year through its investment arm Prosperity7.

Petrochemistry is going to be needed well into the future, Zhavoronkov said. In addition to renewable energy and other ESG efforts, the efficiency of petrochemicals should be a top priority.

“If you burn certain petrochemicals in certain combinations, you can achieve a reasonably clean burn and an energy efficient burn,” he said. For specific tasks like space travel or Formula 1 racing, combined fuels produce the necessary torque, and generative chemistry can achieve those objectives in a more sustainable way. “I think that we can make the world significantly cleaner just by modifying petrochemical products.”

The technology can also be used to make organic matter in petrochemical products degrade more quickly, which is useful in the case of plastics, Zhavoronkov said.

The company’s AI is primarily based in Montreal and in the drug discovery business in China, but fuel research takes place in Abu Dhabi. Zhavoronkov said he has hired a lot of “AI refugees” from Russia and Ukraine to work at the latter location. The company has 40 employees in the UAE and will likely scale to 70.

Insilico is capitalized for the next two years or so, he said. That doesn’t account for revenue, which closed at just under $30m in 2022. The petrochemical and materials business is under the AI research arm of the business, which is covered by funds raised to date.

“Our board would probably not allow me to reinvent myself as an energy play,” Zhavoronkov said. But the board does not object to applying resources to petrochemical products.

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