BlackRock bets big on DAC

PLUS: TransAlta $658mm Heartland acquisition, EVENSOL RNG, Southwest SAF, "electric natural gas"

Good Morning. This is the Sunya Scoop. The newsletter that takes energy transition news and turns it into an easy-to-read email for you.

Here’s what we have for you today:

  • BlackRock invests $550 million in Occidental Petroleum's Stratos carbon capture project.

  • BlackRock and Occidental's 1PointFive subsidiary form a joint venture to own Stratos.

  • Stratos will be the world's largest carbon capture plant, pulling CO2 from the air.

  • BlackRock's investment represents 40% of the project's total cost, reducing Occidental's share.

  • Stratos aims to remove 500,000 tons of CO2 from the air annually, with credits sold to companies like Amazon and Airbus.

  • Project construction is underway in West Texas, expected to start operating in 2025.

  • Occidental expects strong demand for carbon removal credits, targeting revenue of $580 to $810 per ton.

  • Demand for such credits may rise as airline operators seek emission offsets.

  • The project carries some risks, including potential CO2 injection into old oil reservoirs.

  • About 90% of captured CO2 will be available for carbon-removal credit sales.

  • BlackRock's investment in Stratos is significant for Texas and counters allegations of boycotting the energy industry.

  • TransAlta Corporation to acquire Heartland Generation from Energy Capital Partners for approximately $658 million.

  • Approximately 55% of Heartland's revenues are contracted, with a weighted-average remaining life of 16 years.

  • The transaction includes the assumption of $268 million of low-cost debt, with an expected EBITDA multiple of around 5.5x.

  • Corporate pre-tax synergies are anticipated to exceed $20 million annually.

  • The acquisition adds 1,844 MW of complementary flexible capacity, including cogeneration, peaking generation, transmission capacity, and hydrogen development opportunities.

  • It enhances TransAlta's portfolio in Alberta's energy-only market and competitive positioning in the evolving electricity landscape.

  • The Heartland portfolio supports grid reliability and the energy transition in Alberta.

  • TransAlta expects strong cash flows and an attractive multiple, with approximately 55% of revenues under contract.

  • The assets are projected to add around $115 million of average annual EBITDA, including synergies.

  • Corporate pre-tax synergies are expected to reach $20 million annually, with further potential synergies in the future.

  • TransAlta retains its presence in Alberta, building on regional expertise and advancing the Battle River Carbon Hub Project, a 400 MW integrated clean energy project.

  • The acquisition aligns with TransAlta's commitment to decarbonization and clean energy solutions, supporting its GHG emissions reduction targets and carbon neutrality goals.

  • EVENSOL has developed two renewable natural gas (RNG) facilities in North Carolina, the Foothills Renewables Project in Caldwell County and the Upper Piedmont Renewables Project in Person County.

  • These facilities convert landfill gas from Republic Services' landfills into RNG, providing an environmentally friendly alternative fuel source.

  • The combined investment in these projects exceeded $110 million, with Duke Energy as an equity investor and nearly $73 million in loans guaranteed by the U.S. Department of Agriculture.

  • Both projects encompass development, design, permitting, construction, commissioning, and operations of state-of-the-art RNG facilities.

  • Energyneering Solutions, LLC (ESI) designed, constructed, and will operate the facilities, utilizing equipment from companies such as Air Liquide, Guild Associates, Perennial Energy, and Vilter Manufacturing.

  • The RNG produced will be used as clean transportation fuel for commercial fleet vehicles.

  • Each project is expected to initially produce up to 500,000 dekatherms of RNG annually, equivalent to the average annual natural gas consumption of nearly 17,000 residential customers in North Carolina.

  • Duke Energy, an equity investor, is committed to supporting sustainable energy solutions.

  • Republic Services aims to decarbonize operations and increase biogas reuse by 50% by 2030 through landfill RNG projects like these.

  • Southwest Airlines signs an offtake agreement with USA BioEnergy for up to 680 million gallons of sustainable aviation fuel (SAF).

  • Over a 20-year term, blending SAF with conventional jet fuel could result in 2.59 billion gallons of net-zero fuel and prevent 30 million metric tons of CO2 emissions.

  • Southwest plans to start buying SAF from USA BioEnergy's Texas facility near Bon Wier as early as 2028.

  • The agreement establishes a long-term strategic relationship, allowing Southwest the potential to purchase an additional 180 million gallons of SAF annually from future planned production facilities.

  • Southwest aims to replace 10% of its total jet fuel consumption with SAF by 2030.

  • The partnership aligns with Southwest's goal of achieving net-zero carbon emissions by 2050 and USA BioEnergy's objective of becoming a leading producer of carbon-negative fuel.

  • Tree Energy Solutions (TES) and Tokyo Gas sign an agreement to explore and develop e-NG (electric natural gas) supply chains globally to accelerate the decarbonization of hard-to-abate sectors.

  • The partnership aims to raise global awareness of e-NG, establish an international CO2 emissions counting system for e-NG and other carbon-neutral fuels, and create an international supply chain for e-NG.

  • In Japan, e-NG is seen as a promising option to achieve carbon neutrality by 2050, especially for meeting heat demand, which accounts for 60% of the country's total energy demand.

  • e-NG can utilize existing city gas infrastructure, facilitating a smooth transition to carbon neutrality and cost containment.

  • In Europe, e-NG production plants are operational, and new projects are being considered in countries like Germany and France, making it a realistic transition option that utilizes existing LNG and natural gas infrastructure.

  • Both companies aim to accelerate the decarbonization of LNG and city gas by expanding the use of e-NG.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.