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Verde Clean Fuels to develop lower carbon gas refinery in West Texas

The project would consume natural gas in the pipeline-constrained Permian Basin as feedstock, potentially mitigating the flaring of up to 34 million cubic feet of natural gas per day.

Verde Clean Fuels, Inc. and Cottonmouth Ventures LLC, a subsidiary of Diamondback Energy, have executed a Joint Development Agreement for the proposed development, construction, and operation of a facility to produce commodity-grade gasoline utilizing associated natural gas feedstock supplied from Diamondback’s operations in the Permian Basin.

The JDA provides a pathway forward for the parties to reach final definitive documents and Final Investment Decision for the proposed project, according to a news release. The JDA frames the contracts contemplated to be entered into between the parties, including an operating agreement, ground lease agreement, construction agreement, license agreement and financing agreements as well as conditions precedent to close, such as FID.

The expectation for the project is to produce approximately 3,000 barrels per day of fully-refined gasoline utilizing Verde’s patented STG+® process. By consuming natural gas in the pipeline-constrained Permian Basin as feedstock, the proposed project could demonstrate the ability to mitigate the flaring of up to 34 million cubic feet of natural gas per day, while also producing a high-value, salable product.

“The Verde Clean Fuels team is incredibly excited to finalize this JDA with Diamondback Energy with the goal to produce gasoline from natural gas in the Permian Basin,” said Ernie Miller, CEO of Verde. “This arrangement brings compounding economic and environmental benefits to West Texas. We believe that the ability to de-bottleneck midstream constraints along with the potential to reduce flaring of natural gas, while creating less carbon intensive gasoline, is of paramount interest to natural gas producers.”

“This agreement, with the first planned project in Martin County, fits perfectly with Diamondback’s strategy to decarbonize the oil field while ensuring a return for our investors,” said Kaes Van’t Hof, President of Diamondback. “Additionally, the scalability of the project is incredibly exciting, with similar natural gas-to-gasoline facilities possible across Diamondback’s locations in West Texas. We are proud to partner with Verde to bring this technology to the market.”

The proposed facility, which is to be located in Martin County, Texas in the heart of the Permian Basin, could serve as a template for additional natural gas-to-gasoline projects throughout the Permian Basin and other pipeline-constrained basins in the U.S., as well as address flared or stranded natural gas opportunities internationally.

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Air Liquide invests in two U.S. RNG units

Air Liquide has commenced construction on two dairy-waste RNG units in Pennsylvania and Michigan.

Air Liquide has commenced construction of two new RNG production units located in Center Township, Pennsylvania, and Holland Township, Michigan, treating waste sourced from dairy farms, according to a press release.

The production units will produce biogas from manure feedstock in an anaerobic digester for a total production capacity of 74 GWh, and return the digested waste for the farms’ needs, promoting circular economy in waste management. Using Air Liquide’s proprietary gas separation membrane technology, the biogas will then be purified into RNG and injected into the natural gas grid.

Air Liquide has developed competencies throughout the whole biomethane value chain, starting with biogas production from waste, to its purification into biomethane to be injected into gas grids or compression/liquefaction with storage and transportation to customers. Air Liquide currently has 26 biomethane operational production units in the world for a yearly production capacity of about 1.8 TWh, according to the news release.

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OPAL Fuels inks credit facility led by Apollo credit arm

The $500m credit facility will fund the RNG company’s growth initiatives. Apollo’s infrastructure credit arm, Apterra, led the deal.

OPAL Fuels Inc., a vertically integrated producer and distributor of renewable natural gas (RNG) and renewable electricity, has closed on a new $500m senior secured credit facility, according to a news release.

The credit facility consolidates certain existing indebtedness and provides approximately $300 million in availability, which is anticipated to be used principally for development and construction of renewable energy projects.

“The closing of this Credit Facility provides OPAL Fuels significant liquidity and financial flexibility to fund our strategic growth initiatives,” said Jonathan Maurer, co-chief executive officer of OPAL Fuels. “This facility further supports growth through the funding of the next phase of our Advanced Development Pipeline. It also streamlines the balance sheet and strengthens our standing as a leading, vertically integrated presence in the industry.”

Apterra Infrastructure Capital LLC functioned as Sole Bookrunner and Syndication Agent for the Credit Facility and Bank of America, N.A. is Administrative Agent.

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Black Hills Energy studying hydrogen production from coal

BHE will partner with Babcock & Wilcox to study the cost and economics of deploying chemical looping technology at commercial scale to produce hydrogen from Powder River Basin coal and a nearly pure stream of CO2.

Black Hills Energy (BHE) has selected its BrightLoop hydrogen generation technology from Babcock & Wilcox for the feasibility study of a proposed project to produce clean hydrogen from coal and capture carbon dioxide (CO2) emissions at BHE’s Neil Simpson Power Plant in Gillette, Wyo.

BrightLoop is a novel chemical looping technology that can use a variety of fuels to produce clean energy with complete CO2 capture, according to a news release from the companies.

BHE will partner with B&W to study the cost and economics of deploying the BrightLoop chemical looping technology at commercial scale to produce low carbon intensity hydrogen gas from Powder River Basin (PRB) coal and a nearly pure stream of CO2 suitable for beneficial use or storage without the need for expensive carbon separation equipment.

“As the United States and much of the world transitions to near-zero emissions fuels, our BrightLoop technology – which captures COand other pollutants while producing hydrogen – can provide a vital pathway to utilize our abundant natural resource of coal in a net-zero world,” said B&W Executive Vice President and Chief Operating Officer Jimmy Morgan.

“We are excited to utilize our highly experienced U.S. engineering team to work with BHE to develop a solution that will help them achieve their goals of creating and preserving jobs, diversifying Wyoming’s energy production and establishing new markets for the state’s natural resources,” Morgan said. “We thank BHE for this opportunity and for the confidence they have shown in B&W’s BrightLoop technology.”

Mark Stege, Black Hills Energy’s vice president of Wyoming operations agreed, adding, “Over 30 years of research has led us to this opportunity to unite clean energy technology with Wyoming’s important and abundant energy resources. We appreciate the partnership with B&W and the prospect of leveraging innovative hydrogen technology to deliver efficient energy to customers.”

B&W’s BrightLoop chemical looping technology is part of its ClimateBright suite of decarbonization and hydrogen technologies. The BrightLoop process uses a proprietary, regenerable particle and has been demonstrated to effectively separate CO2 while producing hydrogen, steam and/or syngas.

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Illinois ethanol company seeking offtaker for SAF project

Seeking to diversify into new markets, Marquis, a family-owned ethanol producer based in Illinois, is looking for an offtaker for its first sustainable aviation fuel plant.

Marquis, a family-owned ethanol producer based in Illinois, is seeking an offtaker for its first sustainable aviation fuel plant.

The company, which is developing the plant in partnership with LanzaJet, an SAF firm, recently completed a feasibility study for the project, and is looking for airlines or users of renewable diesel as offtakers, Dr. Jennifer Aurandt Pilgrim, the company’s director of innovation, said in an interview.

Marquis owns and operates a 400 million gallon per year ethanol plant – the largest dry-grind ethanol plant in the world – which produces sustainable ethanol for fuel and chemicals as well as a feed for the aquaculture and poultry industries.

The company will divert roughly 200 million of those gallons to make 120 million gallons per year of SAF and renewable diesel, Aurandt said, noting that Marquis is looking to branch into new markets where ethanol is a feedstock.

“As more electric vehicles come on, there will be about a 3 billion gallon demand destruction for ethanol, and SAF is one of the great markets that we can diversify into,” she said.

Aurandt said financing for the SAF facility will ultimately depend on who the offtaker is.

Use cases

United Airlines, Tallgrass, and Green Plains Inc. recently formed a joint venture – Blue Blade Energy – to develop and then commercialize SAF technology that uses ethanol as its feedstock.

SAF using corn as a feedstock does not currently qualify for incentives in the Inflation Reduction Act, which uses standards laid out by the International Civil Aviation Organization that effectively exclude corn-based SAF from qualifying.

Marquis and other ethanol producers are pushing for the adoption of a lifecycle greenhouse gas model, known as GREET, developed by the Argonne National Laboratory, that would allow corn-based feedstock to qualify, said Dustin Marquis, the company’s director of government relations.

The company is also looking to attract partners to set up operations in the Marquis Industrial Complex, which is touted as a 3,300-acre industrial site with natural gas lines, access to multiple forms of transportation, and carbon sequestration on-site.

“We’re looking for other businesses where there would be either vertical integration or business synergies between the two organizations,” Marquis said.

Marquis said in a news release it would develop two 600 ton per day blue hydrogen and blue ammonia facilities along with manufacturing for carbon neutral bio-based chemicals and plastics.

CO2 utilization

In its production process, Marquis makes 1.2 million tons of biogenic CO2 per year, and has applied for an EPA Class IV permit for sequestration.

“We like to say it’s direct air capture with the corn plant,” Aurandt said, adding that the CO2 is purified via fermentation to 99.9% pure, and will be injected into a formation that sits beneath the Marquis Industrial Complex.

The company is additionally developing a CO2 utilization project with LanzaTech, which would augment ethanol production using CO2 as a feedstock. The project was recently awarded an $8.54m grant from the US Department of Energy, the largest award in the category of corn ethanol emission reduction.

“We can increase the amount of ethanol that we produce here by 50%,” Aurandt said. “So we could make 200 million gallons of ethanol per year” from CO2, she added, noting that the pilot demonstration will be the largest CO2 utilization project in North America. It is expected to be operational in late 2024.

The SAF plant and the CO2 utilization project will use hydrogen for refining and as an energy source, respectively, Aurandt said.

Gas Liquid Engineering is the EPC for the CO2 unit, and Marquis will use compressors from Swedish multinational Atlas Copco.

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Exclusive: Waste-to-fuels developer preparing capital raise

A waste-to-fuels developer has lined up an advisor and is planning a capital raise for a project in West Texas, in what is expected to be the first of up to 20 similar fundraising efforts totaling $500m in external capital needs.

Recover, Inc., a Calgary-based waste-to-fuels project developer, is preparing to launch a capital raise for its first US-based projects in West Texas.

The company has lined up CIBC to assist with the capital raise while a large Canadian Crown Corporation is expected to sign on as a lending partner for the debt portion of the cap stack, CFO Shane Kozak said in an interview.

Kozak said he will need to raise $70m – $75m for the West Texas project, which will process waste from oil and gas drilling fluids and recover 800 barrels per day of low carbon intensity diesel fuel from 800 tons of waste.

Existing equity backers Azimuth Capital and BDC will participate in the capital raise, but the company is seeking additional project equity investors to take part in a 60% debt to 40% equity capital structure, Kozak said.

While the cost of the West Texas project is estimated at $55m, the company needs to raise approximately $70m to account for debt servicing and underwriting fees, he added.

Recover has mapped out a strategy to build 20 projects in oil and gas basins across the US, and estimates it will need to raise $500m in external capital over 10 years to fully develop those projects.

Project model

The company already operates a similar facility in Alberta that became operational in 2018, at a cost of CAD 20m and producing about half of what the West Texas project will produce.

“This has been commercially proven in Canada, and we’re going to a better market with a lot more drilling waste production” in the US, Kozak said.

The waste stream from oil and gas drilling contains large amounts of diesel fuel: a typical well will create 400 – 500 tons of waste, 30%-40% of which is recoverable low carbon intensity diesel, Kozak said.

In Texas, the drilling fluid waste often ends up in pits near drilling rigs or in industrial landfills, where it biodegrades over time and emits CO2 and methane into the atmosphere.

“We significantly reduce GHG emissions and create a fuel source that can be reused, and every barrel that we recover is a barrel of fuel that would otherwise have to come from a fossil fuel source,” he said.

Recent changes to Texas policy regarding oil and gas drilling waste could increase the availability of feedstock for the company. The Texas RailRoad Commission, which oversees the state’s oil and gas industry, is seeking to modernize disposal practices that would redirect waste from drilling pits to more centralized industrial landfills.

“The good thing for us is that, in the Permian Basin, about 70% – 80% of the wells use these pits, and our strategy is to build our facility directly on industrial landfills,” Kozak said.

Recover is working with a large landfill management company with operations across the US to develop its facilities, he added. The company does not pay for feedstock, given the synergistic relationship between Recover and the landfill management company.

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Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere.

The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.
The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

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