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Texas PUC rejects hydrogen co-firing at proposed Entergy gas plant — for now

Regulators knocked down the prospect of hydrogen co-firing at the plant, but said Entergy could re-apply in the future.

The Texas Public Utilities Commission struck the hydrogen component from an Entergy proposal to build a power generation facility that would burn both natural gas and hydrogen.

In a ruling last week, the PUC said that Entergy did not sufficiently demonstrate reliability or economic benefits to ratepayers associated with hydrogen co-firing at the Orange County station, a new combined-cycle combustion turbine facility with a nominal output of l,215 MW.

The commission added that “there are concerns regarding the environmental effect of emissions to produce gray hydrogen from natural gas as Entergy proposed.”

“Hydrogen co-firing capability is simply not needed by the Orange County station at this time,” the commission added.

However, the commission recognized that Texas is positioned to lead in the development of hydrogen and that the Orange County station is in a favorable location, further noting that Entergy may amend its application in a future proceeding when “there is more robust evidence on the reliability or economic benefits, or both, associated with hydrogen co-firing” at the plant.

Executives at New Fortress Energy said recently they were considering the Orange County power station as a potential offtaker for the company’s Beaumont, Texas green hydrogen facility.

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OMERS exec joins CCS project developer

Former managing partner and head of ventures at OMERS Ventures Damien Steel has joined a Montreal-based CCS developer as CEO.

Deep Sky, a Montreal-based venture commercializing carbon removal and storage solutions at scale, today announced that Damien Steel will take the helm as CEO.

Most recently, Steel served as managing partner and global head of ventures at Toronto-based OMERS Ventures (OV), part of one of Canada’s largest pension plans. There, he was responsible for investments, fund operations, and strategic global oversight of the group. During his tenure, he tripled the size of the platform to $2.5bn in assets while generating strong growth. Previously, he held roles with BridgeScale Partners and EdgeStone Capital Partners. Before joining OV, Damien was a healthcare entrepreneur, founding and selling a digital dental laboratory startup. He also serves on the board of tech disruptors, including Hopper, TouchBistro, Hootsuite and DuckDuckGo. Alongside his new CEO role at Deep Sky, Damien will remain a senior advisor to OMERS Ventures.

Steel brings significant finance, climate, infrastructure, and corporate governance experience in the highly regulated Canadian pension business to the position. In 2022, he led the early stage investment into a Toronto-based climate tech startup and gained first-hand insight into how businesses globally are prioritizing climate risk. Steel also led OV’s largest and most successful investment in travel app, Hopper, also started by Deep Sky founders Fred Lalonde and Joost Ouwerkerk. Through his work with Hopper in recent years, Damien has become increasingly committed to tackling the climate crisis.

“For nearly two decades I’ve had the privilege of supporting world class founders in their efforts to build world class companies,” said Steel. “At Deep Sky, I hope to apply all that I’ve learned from these great visionaries to what I believe is the greatest challenge facing humanity today – climate change inaction.”

“Building an ambitious company to reverse climate change requires an equally ambitious, big thinker at the helm,” said Deep Sky Co-Founder Fred Lalonde. “Damien is a proven visionary, leader, fundraiser, and operator who can catapult Deep Sky’s growth to meet the urgent threat that climate change presents. In working together since 2012, he’s demonstrated an uncanny knack for spotting the next moonshot that withstands the test of time. I’m pleased that he’s recognized Deep Sky as his next big bet.”

Deep Sky is working to build large-scale carbon removal and storage infrastructure in Canada. Acting as a project developer, the company is bringing together the most promising direct air and ocean capture technologies to deliver the largest supply of high quality carbon credits to the market. Powered by renewable energy, Deep Sky’s facilities are strategically located in Quebec, a region with an abundance of hydroelectric power, immense wind power potential and a vast territory with the rich geological makeup required for carbon capture.

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TPG Rise acquires fuels testing and certification company

The target firm, AmSpec, increasingly facilitates the penetration of biofuels, hydrogen, sustainable aviation fuel, and other alternatives throughout the global fuel system.

TPG Rise Climate, the dedicated climate investing strategy of TPG’s global impact investing platform TPG Rise, has signed a definitive agreement to acquire AmSpec Group, Inc., one of the fastest growing Testing, Inspection, and Certification (TIC) companies specializing in energy, commodities, and fuels.

AmSpec’s existing majority shareholder, Olympus Partners, will retain a minority interest in the company. Additional terms of the investment were not disclosed.

Goldman Sachs and Baird served as financial advisors and Morgan Lewis served as legal counsel to AmSpec in relation to the transaction.

Founded in 1986, AmSpec operates an extensive global footprint of over 300 inspection sites and laboratories throughout 61 countries, many of which are located at key industrial centers, ports, or trade hubs. AmSpec’s core service involves testing and certifying the performance and emission qualities of fuels or commodities at each stage along the value chain.

By monitoring and reporting to regulators and independent certification bodies, AmSpec plays a key role in emissions controls and enforcement on conventional fuels, while also increasingly facilitating the penetration of biofuels, hydrogen, sustainable aviation fuel, and other alternatives throughout the global fuel system.

“As part of its broad set of services, AmSpec has developed deep expertise in the control of pollutants and emissions factors in legacy fuels, and they will play a critical role in processing, testing, and certifying the growing volume of increasingly complex renewable fuels that we see coming online,” said Marc Mezvinsky, Partner at TPG and senior member of its climate investing team. “We are thrilled to be investing in AmSpec’s best-in-class lab network at this inflection point in the global fuels mix, and we look forward to working closely with the management team to enter new markets and accelerate the global energy transition.”

As part of the transaction, Mezvinsky will join AmSpec’s Board of Directors along with TPG Rise Climate’s Roger Stone and Tracy Wolstencroft, a TPG Senior Advisor who served as former president and CEO of both the National Geographic Society and executive search and management consulting company Heidrick & Struggles. He also served as former chair of Goldman Sachs’ clean energy technology practice.

“Our commitment to innovation and service has made us a leader in the industry, and we are excited about what we will be able to accomplish with this new partnership. TPG Rise Climate has the resources, network, and vision to drive our next phase of growth, particularly as global supply chains rapidly change and the flows of critical molecules begin to transition,” said Matt Corr, CEO of AmSpec. “Our team is fully aligned with TPG on capturing the opportunity set in front of us and we are grateful to have Olympus’s continued partnership and support.”

The transaction is subject to regulatory review and customary closing conditions and is expected to close in the fourth quarter of 2023.

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LSB Industries pushing blue over green

LSB executives said they have paused a green ammonia project due to expected capital costs and a lack of clarity on tax credit incentives. But they detailed plans for a blue ammonia facility, including spending some $150m of cash over three years to fund their equity portion of the project, which was recently proposed for the Houston Ship Channel.

US ammonia producer LSB Industries sees market forces working in favor of blue ammonia projects versus green ammonia, and is prioritizing its blue projects while pausing a green ammonia facility planned for Pryor, Oklahoma.

Executives yesterday pointed to lower natural gas prices and an uptick in power prices along with missing guidance from the US Treasury for green molecules as the reason for pausing the green ammonia project.

Oklahoma-based LSB will use a project financing structure to fund its proposed blue ammonia plant in the Houston Ship Channel and likely find initial offtakers among Japanese and Korean power companies, CEO Mark Behrman said.

The facility, which would produce approximately 1.1 million metric tons of ammonia and capture and sequester 1.6 million metric tons of CO2 annually, is currently in the pre-FEED phase and planned for construction on the Vopak Moda Houston Ship Shuttle Ammonia Terminal.

“We selected the supplier of the technology license basic, engineering design, proprietary equipment, and catalyst, and we are in negotiations to finalize the related agreements,” Behrman said in prepared remarks. “In addition to engineering and design activities, we are working to secure offtake customers for the anticipated ammonia production. We expect initial offtakers to be Japanese and South Korean power companies.”

LSB is developing the facility in partnership with INPEX, Japan’s largest E&P company, and plans to build and operate an ammonia synthesis loop using low-carbon hydrogen produced by Air Liquide, who will also handle the carbon capture and sequestration as well as the nitrogen supply.

Based on LSB’s feasibility study, the cost of the project would come in between $500m and $750m, Behrman said, which could conservatively be financed with 60% debt, and, when taking the $750m figure, would amount to $450m of debt and $300m of equity to fund the facility.

“And for simplicity purposes, we haven’t worked out the ownership structure quite yet,” Behrman said, “but assuming that LSB and INPEX [have] 50/50 ownership of the loop that would be $150m of cash from LSB over a three-year period.”

The pre-FEED phase will last until 2Q24 followed by a one-year FEED period that would finish in 2Q25, he said.

“Within the time of us executing on a FEED study, we would expect that we would have negotiated take-or-pay contracts with the federal government, Japanese and Korean and potentially European and U.S. off-takers for the ammonia that we would produce,” Behrman said. “At the end of FEED, we would have to make a decision on whether we’re moving forward, so FID, and we would not move forward without take-or-pay contracts.”

Green ammonia pause

Meanwhile LSB has paused its green ammonia project, “given the uncertainty around the 45 tax credits, combined with the project’s current capital costs,” Behrman said.

He added: “We remain excited about this project and our opportunity to be an early entrant into the production of green ammonia and we continue to have discussions with potential offtakers for green ammonia supply, but we need clarity and finalization of the 45V tax credits before we can make a decision to move forward.”

Natural gas prices have decreased in the US while electricity prices have increased, working in favor of natural gas products.

“That then is a considerable headwind for the build-out of industry based on sourcing power from the grid, which includes green ammonia production,” he said.

“This development is also why we believe the path to blue ammonia is much easier than the path of green ammonia today, especially considering the lack of a green premium favoring production economics,” the executive said. “Therefore, our current focus is on making sure we execute effectively on our El Dorado blue ammonia project and our Houston Ship Channel blue ammonia project as they both set us up well for the future.”

At El Dorado, LSB is in discussions with the EPA for a Class V carbon capture and sequestration permit, and expects to commence production at the plant in 2H25.

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Ammonia-to-power company planning up to $500m Series C

Ammonia-to-power start-up Amogy will launch a final equity raise once it establishes revenue milestones in 2023 and 2024

Amogy, an ammonia-to-power technology start-up, will likely launch a $400m to $500m Series C late next year, CEO Seonghoon Woo said in an interview.

The company should achieve its first revenues this year and grow those revenues in 2024 to reach a target valuation, Woo said. The company to date has not used a financial advisor.

Amogy is planning to use proceeds from a recent Series B-1 capital raise to expand into a Houston manufacturing facility as it seeks to bring its product to the market.

After demonstrating its technology on a drone, a tractor, and a semi truck, the company is currently working to install its ammonia-cracking technology on a tugboat, and plans to advance a commercialization strategy starting in 2024, Woo said.

The proceeds of the $139m capital raise announced last week will allow Amogy to expand into an already-built facility in Houston, Woo said. The company also plans to roughly double its workforce from 110 employees currently as it boosts capacity in R&D, manufacturing, and commercialization.

CEO Seonghoon Woo

Amogy was founded in 2020 by four MIT PhD alumni, including Woo, and is based in Brooklyn, New York.

Ammonia vs hydrogen

Woo believes using ammonia as a fuel and cracking it into hydrogen solves the transportation issues facing hydrogen, as ammonia is already a widely traded global commodity.

Similarly, at room temperature, ammonia can be stored as a liquid with only mild pressure (~8 bar), compared to the cryogenic requirements for liquid hydrogen.

And, according to a white paper commissioned by Amogy, the volumetric energy density of liquid ammonia is 12.7 megajoules per liter, which is higher than for liquid hydrogen at 8.5 MJ/L and compressed hydrogen at 4.7 MJ/L (at a pressure of 69 MPa in ambient temperature conditions), but lower than for diesel or gasoline.

“Over an equivalent distance, fueling a vehicle solely using ammonia would require approximately three times the internal tank volume needed for conventional diesel fuel but three times less than the volume required for compressed hydrogen,” the paper reads.

While Amogy’s technology is compatible with any color ammonia, Woo said regulations in Scandinavia and Europe give confidence that the global market for clean ammonia will become competitive with fossil-based fuels.

Scaling up

The recent capital raise gives Amogy roughly two years of runway before additional fundraising might be needed, at which point the company will have more visibility into revenue growth, Woo added.

The latest funding round was led by SK Innovation, joined by other global investors including Temasek, Korea Zinc, Aramco Ventures, AP Ventures, MOL PLUS, Yanmar Ventures, Zeon Ventures and DCVC.

The company previously raised roughly $70m in three separate funding rounds, with proceeds allowing it to demonstrate the drone, heavy-duty tractor, and semi truck. Woo said the tractor project drew interest from John Deere, which sent representatives to observe and offer some assistance on the retrofit.

In previous capital raises, Woo said Amogy has encountered investor reluctance to enter what is considered an early market with regulatory and economic risk, with some investors wanting to wait as much as another two years before gaining exposure to the market. The strongest interest has come from upstream producers.

Amogy plans to continue scaling up its technology in the maritime industry to cargo and container ships as well as offshore supply vessels, Woo said.

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Low-carbon crude refinery developer lining up project cap stack

The developer of a low-carbon crude refinery is in talks with banks and strategics to line up project financing for a $5.5bn project in Oklahoma.

Texas-based Southern Rock Energy Partners is holding discussions with banks and potential strategic investors with the aim of shaping a $5.5bn capital stack to build a low-carbon crude refinery in Cushing, Oklahoma.

The project, a first-of-its-kind 250,000 barrel-per-day crude refinery, would make it the first crude facility of that size built in the United States in several decades.

The company is evaluating a project finance route with a debt and equity structure for the project, and has held talks with several major investment banks as well as “industry-leading” strategics in midstream, industrial gas, and electricity generation, Southern Rock Managing Partner Steven Ward said in an interview.

In support of the refinery, the city of Cushing and the Cushing Economic Development Foundation approved $75m in tax-exempt private activity bonds, Ward noted. He added that the company could also tap industrial revenue bonds as well as PACE equity financing.

Seed capital for project development has so far come from strategic partners, some of which are operational partners, Ward said. He declined to comment further on the capital raise, noting that engagement letters have yet to be signed.

Engineering firm KBR is conducting a feasibility study for the Cushing project, and the company is moving through land acquisition, air permit preparation, and EPC selection, Ward said.

While most crude refineries consume natural gas, off-gasses, and ambient air, Southern Rock’s proposed refinery would use oxygen along with blue hydrogen produced from the refining off-gasses and green hydrogen from electrolysis. The process would eliminate 95% of greenhouse gas emissions at the proposed refinery.

“Our furnaces and our process heating units are fed 100% hydrogen and oxygen,” Ward said, noting that this type of system does not currently exist in the market. The company is expanding on technology it licenses from Great Southern Flameless, he said.

The size of the refinery would make it the largest to be built in the US since Marathon Petroleum built a 200,000 barrels-per-day facility in 1976.

Certain other low-carbon crude projects have been in the market for several years. Meridian Energy has been seeking to build cleaner crude refineries in North Dakota. Raven Petroleum ran up against environmental concerns while seeking to build a clean refinery in Texas. And MMEX is aiming to build an “ultra clean” crude refinery in West Texas.

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Renewable hydrogen developer in exclusivity with strategic investor

A renewable hydrogen developer based in the western US is reaching the final stages of a capital raise with an investor in exclusivity.

NovoHydrogen, the Colorado-based renewable hydrogen developer, is in exclusivity with clean energy investment platform Modern Energy, according to two sources familiar with the matter.

ReSource reported in February that GreenFront Energy Partners was advising the company on a Series A.

NovoHydrogen CEO Matt McMonagle said previously that the company has about 30 projects in development in the US, ranging from a few megawatts to hundreds of megawatts. Its most active markets are the West coast, Northeast, Appalachia, Texas and the Rocky Mountains, though the company is not geographically constrained.

The company aims to begin construction on its first projects by the end of this year, the executive had said.

NovoHydrogen declined to comment. GreenFront and Modern Energy did not respond to requests for comment.

Modern Energy, a certified B-Corporation, recently put $90m into net metered solar developer Industrial Sun along with partner EIG. In 2020 EIG committed USD 100m to Modern Energy through a debt facility to fund the development of clean energy assets.

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