M&A, Project finance, Raising capital

US hydrogen and LNG developer raising capital

A Texas-based project developer is conducting a development capital raise for a flagship LNG and green hydrogen project in the Northeast.

February 1, 2023

New Energy Development Company, a Katy, Texas-based developer with offices in Boston, Texas, is raising between $5m and $8m for an LNG liquefaction, storage and re-gasification facility with additional green hydrogen production and storage, Partner Scott Shields said in an interview.

The company is not using a financial advisor, Shields said, noting that a larger second round capital raise will likely start near the beginning of 2024.

New Energy has secured a brownfield site for a peak-shaving LNG facility in New England with 2 billion cubic feet of storage capacity and 50 MW of solar pv, Shields said. Also planned is an expandable 40 MW PEM electrolyzer line.

He declined to name the state in which the project is located, adding that the company is trying to put a strong support system and marketing plan in place before the location is made public.

The proceeds of the capital raise will go in part to hiring local lawyers and engineering and design work (pre-FEED and FEED), through to FID, Shields said. The project will be built in two phases, Phase 1 being the LNG component and Phase 2 focusing on green hydrogen.

The LNG facility will be the offtaker for the hydrogen, which will run the plant when the solar is insufficient. Through an open season process New Energy has identified five investment grade offtakers for the LNG.

Ramping capex

“We’ve been self-funding up until now,” Shields said of New Energy, which has also put capital and development resources into half-a-dozen other projects around the country.

It’s time for a ramp up in capital expenditures and New Energy is in discussions with strategic and private equity providers, Shields said, noting that the company would prefer the former. Discussions include options to fund just the flagship project, as well as platform equity.

Shields noted that he has investment banking experience and that New Energy Managing Partner Alexander “Hap” Ellis serves as chairman of Old Westbury Funds and the George and Barbara Bush Foundation.

New Energy has partnered with McDermott International to develop patented GreenER hydrogen facilities, a modular, expandable hydrogen facility that can produce 24,000 kg per day (2,760 MMBtu) of renewable hydrogen. The companies in 2021 completed engineering deliverables for multiple designs which are marketed as ideal for grid-scale blending with natural gas pipelines, blending for existing or new power generating facilities and storage injection into salt caverns and above ground storage tanks.

The company has also combined GreenER LNG and hydrogen production and storage plants into an integrated energy hub, capable of producing an additional 200,000 MMBtu of LNG.

New Energy recently hired Chico DaFonte, formerly a vice president at Liberty Utilities, a subsidiary of Algonquin Power, as executive vice president working on LNG and hydrogen projects.

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Innovation, Project finance, Project news, Raising capital

Clean fuels developer in negotiations to finance West Texas projects

MMEX is in negotiations with international banks to raise capital for green and blue ammonia projects as well as a clean fuels refinery in West Texas.

MMEX, a developer of clean fuels projects, is talking with international banks to raise debt and equity for green and blue ammonia projects as well as a clean fuels refinery in West Texas.

Fort Stockton, Texas-based MMEX is seeking to advance both green and blue hydrogen projects on the same site in Pecos County, with the green hydrogen project expected to cost between $850m – $900m at “2x capacity,” according to a company presentation.

Meanwhile, estimated capex for the blue hydrogen project is $1.25bn, according to a separate presentation.

MMEX, which is led by oil industry veteran Jack Hanks, recently tendered to provide 209,300 tons of green ammonia, equivalent to 25,000 tons of delivered hydrogen, to an oil major and chemical company. The green hydrogen would be produced on site and transported via rail to Corpus Christi.

MMEX has partnered with TotalEnergies to provide solar power for both the green and blue projects.

For the green hydrogen project, MMEX says it would install seven Siemens Sylizer electrolyzers rated at 17.5 MW each, producing 55.4 tons of green hydrogen, or 209 tons per day of ammonia.

The company estimates a 24-month construction to COD timeline from financial close for the green hydrogen project.

The blue hydrogen project, with an estimated 30-month construction timeline, would produce 450 tons per day via Topsoe auto thermal reformer.

Additionally, MMEX is seeking to construct a clean fuels refinery which would take in crude oil and produce gasoline and ultra-low-sulfur diesel.

February 6, 2024

M&A, Raising capital

Superior Plus establishes low carbon fuels distribution platform with CAD 1.05bn Certarus acquisition

Superior Plus Corp. and Certarus Ltd. have entered into a definitive agreement for Superior to acquire Certarus, a North American distributor of over-the-road low carbon fuels, including CNG, RNG and hydrogen.

Superior Plus Corp. and Certarus Ltd. have entered into a definitive agreement for Superior to acquire Certarus, a North American low carbon energy solutions provider for a total acquisition value of CAD 1.05bn, representing 8.5x 2022E EBITDA, according to a news release.

Under the terms of the acquisition, Superior will acquire all the outstanding common shares of Certarus, representing an equity value of CAD 853m and assume Certarus’ outstanding senior bank credit and leases with a total value of CAD 196m. The Certarus shareholders will receive CAD 353m in cash and CAD 500m of Superior common shares priced at $10.25 per share, representing approximately 17% pro forma ownership. The transaction has been unanimously approved by the Board of Directors of both Superior and Certarus and is expected to close in the first quarter of 2023, subject to customary closing conditions.

Certarus is a rapidly growing North American distributor of over-the-road low carbon fuels, including CNG, RNG and hydrogen. Through the use of mobile storage units (MSUs), Certarus delivers low cost and low carbon intensity energy alternatives to its customers. Certarus’ MSUs are interchangeable between CNG, RNG and hydrogen giving Certarus flexibility to service its customers across North America as they transition away from diesel and other distillates. Certarus provides a virtual pipeline to its customers that do not have infrastructure in place or are in need of supplemental infrastructure. Revenue is generated from fees for service to provide its lower cost and lower CI fuels, directly passing on changes in the commodity cost of its fuels to customers.

Certarus has 18 hubs throughout Canada and the U.S. and expects to have 640 MSUs by year end, making it the largest on-road low carbon fuels distributor in North America with approximately 85% of its revenue generated in the U.S. From 2020 to 2022E, Certarus has grown the number of MSUs by 37%, the volume of low carbon fuels delivered by approximately 76% to 57,000 MMBtu/d and is expected to maintain substantial growth as the demand for its products continues to increase. Over the same period, Certarus has more than doubled its Adjusted EBITDA2, with expected 2022 Adjusted EBITDA of $124 million, driven by continued volume and efficiency improvements.

Certarus’ rapid growth is the result of increasing customer demands to transition from higher cost and higher carbon intensity fuels such as diesel and other distillates to lower cost and lower carbon energy alternatives. The acquisition of Certarus accelerates Superior’s energy transition path with a business that is both rapidly growing and accretive to Superior’s financial results.

“The acquisition of Certarus is a highly strategic and transformative transaction for Superior as it represents an exciting opportunity for significant organic growth and provides our existing and new customers with the ability to meet their ESG goals through our low carbon energy distribution platform,” said Luc Desjardins, Superior’s president and CEO. “With our execution on the Superior Way Forward strategic initiatives in the past 24 months, we are ahead of our timing to achieve CAD 700m to CAD 750m in EBITDA from operations as we now expect to reach the lower end of the target by 2024.”

Curtis Philippon, Certarus’ President and CEO stated, “we are excited to be joining the Superior team. Certarus will benefit from Superior’s scale, portable fuel distribution expertise, and a shared commitment to safety. The joining of our businesses creates a strong platform upon which we can continue to grow and provide decarbonization solutions, including RNG and hydrogen.”

“We are thrilled to partner with Curtis and the team at Certarus,” said Angelo Rufino, Brookfield’s nominee on Superior’s board of directors and a member of Superior’s ad hoc Committee to evaluate Certarus. “Certarus’ low carbon and alternative fuel distribution platform provides an exciting new organic avenue of growth for Superior Plus and will further assist our core customers as they transition to a lower carbon future.”

Brookfield Asset Management made a USD 260m equity investment in Superior in 2020.

Superior intends to finance the Acquisition and related transaction expenses using a combination of approximately 48.8 million Superior common shares issued directly to Certarus shareholders valued at CAD 500m and incremental drawings from its expanded senior credit facilities.

The expanded senior credit facilities will increase to CAD 1.3bn from the current size of CAD 750m via the addition of a new CAD 550m senior secured credit facility with a three-year term. The New Credit Facility is fully committed with the CAD 550m provided by a group of lenders including Canadian Imperial Bank of Commerce, The Bank of Nova Scotia, The Toronto-Dominion Bank and National Bank of Canada.

CIBC Capital Markets is acting as exclusive financial advisor to Superior. Torys LLP is acting as Canadian legal counsel to Superior.

J.P. Morgan and National Bank Financial Inc. are acting as financial advisors to Certarus. TD Securities Inc. is acting as strategic advisor to Certarus. Burnet, Duckworth & Palmer LLP is acting as legal counsel to Certarus.

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December 22, 2022

Project finance, Project news, Raising capital

Pattern Energy signs green ammonia LOI with Germany’s Mabanaft

As part of the LOI, Mabanaft also plans to evaluate the opportunity to potentially become a co-investor next to Pattern Energy and share ammonia and infrastructure expertise.

German Energy company Mabanaft has signed a letter of intent with US-based Pattern Energy to consider a potential transaction for the supply to Mabanaft of green ammonia.

The green ammonia would be produced by Pattern Energy at the Port of Argentia, in the Canadian province of Newfoundland and Labrador, starting in 2027, according to a news release.

The green ammonia production would require a new production facility with an estimated production capacity of 400 tonnes of ammonia per day. As part of the LOI, Mabanaft also plans to evaluate the opportunity to potentially become a co-investor next to Pattern Energy and share ammonia and infrastructure expertise. The green ammonia, produced with wind energy and hydroelectricity, is expected to make an important contribution to supplying industry in northern Germany and beyond with energy from renewable sources.

The LoI was signed by representatives of both companies at Mabanaft’s headquarters in Hamburg in the presence of the German Federal Minister for Economic Affairs and Climate Action Habeck, the Canadian Minister for Energy and Natural Resources Wilkinson and Hamburg’s Senator for Economic Affairs Leonhard. Habeck and a political delegation from Canada also visited Mabanaft as part of their jointly organised German-Canadian Hydrogen and Ammonia Producer-Offtaker Symposium in Hamburg on 18 March 2024. The delegation trip included visits to companies in Hamburg that are engaged in hydrogen production, hydrogen storage or hydrogen use.

Hamburg’s Senator for Economic Affairs Dr Melanie Leonhard: “The planned collaboration will bring energy from Canadian wind to Hamburg! In future, hydrogen and its derivatives are to be produced with wind energy in the windy region and then transported by ship to the German hydrogen capital, Hamburg. Thanks to the strong industry here, there is security of supply for the energy-intensive industries. Through cooperation between the Port of Hamburg and our Canadian partners, we will help to create the necessary infrastructure on the Canadian side.”

The “New Energy Gate” in Hamburg is also set to play a key role in Mabanaft’s planned imports of green ammonia. The planned New Energy Gate Hamburg is to become Mabanaft’s first major hub for the import, storage and processing of fuels from renewable energy sources. In November 2022, Mabanaft announced plans to build up an import terminal for green energy in the Port of Hamburg, with the US company Air Products as an anchor customer. Volker Ebeling, Senior Vice President New Energy, Supply and Infrastructure at Mabanaft, says: “We are absolutely convinced that hydrogen and its derivatives will play a key role in the energy supply of industrialised nations. The Letter of Intent we have signed today with Pattern Energy is a renewed commitment to this path.”

Cary Kottler, Chief Development Officer of Pattern Energy says: “Pattern Energy is thrilled to be working closely with Mabanaft on the further development of the Argentia Renewables project in Newfoundland & Labrador. As a renewable energy leader in North America, Pattern Energy seeks to partner with energy industry leaders in Europe to fully develop the potential of green fuels production and export infrastructure in North America. The Argentia Renewables project is well positioned to be an early mover in the green hydrogen economy and will serve as an important element in Europe’s energy transition.”

March 18, 2024

Project news

Exclusive: Ambient Fuels options land in Texas

Ambient Fuels recently entered into an option agreement to purchase land in Texas. Among only a handful of green hydrogen developers to attract equity capital last year — from Generate Capital — Ambient has not yet made public announcements about its projects or locations.

Ambient Fuels, a green hydrogen developer backed by Generate Capital, recently signed a 24-month option to purchase a plot of land in Chambers County, Texas, according to filings made with the clerk there.

A memorandum outlines the option to purchase land in Mont Belvieu, to the east of Houston. The agreement is effective as of October 2, according to the filing.

Ambient declined to comment.

According to the ReSource project tracker, Ambient has been involved in three Gulf Coast hydrogen hub efforts: The Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) hub; the Port of Corpus Christi Green Hydrogen Hub; and the Horizons Clean Hydrogen Hub (HCH2). ARCHES was selected for DOE funding.

ReSource reported in June that Ambient Fuels had begun to evaluate potential acquisitions of hydrogen projects that are under development.

In May, 2023, Generate Capital, a sustainable infrastructure investment and operating company, made an investment into Ambient, including a commitment to fund up to $250m of green hydrogen infrastructure.

February 12, 2024

exclusive

Innovation, Project news, Raising capital

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.

February 17, 2023

Personnel moves

EXCLUSIVE: 8 Rivers co-founder departs firm

A co-founder and executive has departed the North Carolina-based firm, which recently announced an ammonia project in Texas.

Bill Brown, a co-founder of the technology commercialization firm and clean fuels developer 8 Rivers Capital, has retired from the company, a spokesperson confirmed via email.

According to Brown’s LinkedIn profile, he is serving now as CEO of New Waters Capital. He co-founded 8 Rivers and also served as CEO and CTO in this nearly 16 years there.

Brown did not respond to a request for comment.

According to 8 Rivers’ website, Dharmesh Patel is serving as interim CEO. The company recently announced development of the Cormorant Clean Energy ammonia production facility in Port Arthur, Texas.

ReSource interviewed Brown in March.

January 11, 2024