Navigating the pause

PLUS: 7 bil for 7 hubs, Breakthrough's $1bn raise, TPG Rise's acquisition, MRO-Glencore LNG deal

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:

  • Navigator CO2 Ventures is putting one of the Midwest's largest carbon dioxide pipeline projects on hold.

  • The company withdrew its permit application in Illinois.

  • All permit applications for the project are being paused.

  • This decision comes after South Dakota regulators denied a permit.

  • The project would transport carbon dioxide emissions from over 20 industrial plants in five states.

  • The Illinois permit was essential for underground carbon dioxide storage.

  • Navigator plans to reassess the project's route and reapply for permits later.

  • Opponents of the project are celebrating the pause and pledge to continue their fight.

  • Other proposed pipelines in the region use carbon capture technology.

  • Summit Carbon Solutions is proceeding with its carbon dioxide pipeline plans despite regulatory setbacks.

You better believe all eyes are glued to this one. The burning question on everyone's mind is: Will the project power through or throw in the towel?

Now, let me break it down for you – in this day and age, rounding up those pre-FID funds, even for colossal infrastructure projects that we're told are a must-have, is no cakewalk.

And even if you manage to secure the funds, whether it's natural gas or CO2 we're talking about, wrangling multi-state infrastructure into existence is one Herculean task.

We're crossing our fingers and hoping that state regulators and landowners can join forces and chart a clear course to push all these projects across the finish line.

Beyond the Gulf Coast, these Midwestern CO2 ventures stand as one of the country's best chances to kickstart the CCS industry.

  • The Biden-Harris Administration announces the creation of seven regional clean hydrogen hubs with $7 billion in funding from the Bipartisan Infrastructure Law.

  • These hubs aim to accelerate the domestic market for low-cost, clean hydrogen as part of the President's clean energy economy vision.

  • The seven hubs will attract over $40 billion in private investment and create tens of thousands of jobs, totaling nearly $50 billion in public and private investment.

  • These hubs collectively plan to produce over three million metric tons of clean hydrogen per year, contributing significantly to the 2030 U.S. clean hydrogen production goal and reducing carbon dioxide emissions by 25 million metric tons annually.

  • Clean hydrogen can be used for

    hard-to-decarbonize sectors like transportation, steel, and cement manufacturing.

  • The selected hubs include the Mid-Atlantic Hydrogen Hub, Appalachian Hydrogen Hub, California Hydrogen Hub, Gulf Coast Hydrogen Hub, Heartland Hydrogen Hub, Midwest Hydrogen Hub, and Pacific Northwest Hydrogen Hub.

  • Each hub focuses on leveraging regional resources and technologies to produce clean hydrogen while creating jobs and promoting equity and community benefits.

  • The Bipartisan Infrastructure Law allocates $65 billion for clean energy investments, including $8 billion for Regional Clean Hydrogen Hubs, supporting hydrogen production, delivery, and end-use.

  • The Department of Energy (DOE) also commits $1 billion for a Clean Hydrogen Electrolysis Program and $500 million for Clean Hydrogen Manufacturing and Recycling RD&D Activities.

  • DOE's Hydrogen Hub Matchmaker resource helps connect clean hydrogen producers and end-users for infrastructure development.

  • Investments and initiatives seek to reduce the cost of clean hydrogen and promote its widespread adoption.

  • The Department of Energy Loan Programs Office has already made investments in clean hydrogen facilities.

So here's the deal, folks. When you look at these hubs, it's pretty clear that most of 'em are gonna be tapping into grid or renewable power (except ARCH2, of course). But here's the kicker – they'll end up using more juice than they can squeeze out in the form of hydrogen.

And if that ain't enough to throw a wrench in the works, the IRS hasn't even bothered to drop the 45V, which is the clean hydrogen tax credit guidance. That means developers out there are scratching their heads, trying to figure out if this whole shebang makes any economic sense in what's already a pretty tricky space.

  • Bill Gates-backed Breakthrough Energy Ventures is seeking to raise another $1 billion for its third fund to invest in companies and technologies combatting global warming.

  • This third fund is expected to increase the number of companies in its portfolio by approximately 40%, totaling around 140 holdings spanning sectors like energy and agriculture.

  • The previous two funds raised approximately $1 billion and $1.25 billion, respectively, and the group also has a $100 million Europe-focused fund.

  • Notable investors and board members include Mukesh Ambani, Jeff Bezos, Reid Hoffman, and Sir Chris Hohn.

  • Despite challenges in the venture capital landscape due to rising interest rates and economic uncertainty, Breakthrough Energy Ventures remains optimistic about its investments.

  • Bill Gates has expressed skepticism about carbon capture and storage (CCS) as a solution to climate change, suggesting that it is not economically viable for mass-scale use.

  • Instead, he advocates for taxing emissions at the marginal cost of capture and investing in alternative techniques to reduce carbon dioxide emissions.

  • The Breakthrough funds also support direct air capture start-ups, reflecting their belief in the importance of innovation to address emissions challenges in various sectors.

  • Gates emphasizes that innovative companies are essential to achieving global emissions reduction goals, especially in challenging sectors like steel and cement.

  • Albemarle's $4.16 billion takeover bid of Liontown Resources is abandoned after Australia's richest person, Gina Rinehart, acquired a 19.9% stake in Liontown.

  • Rinehart's Hancock Prospecting's stock acquisition thwarted Albemarle's plans to take Liontown private.

  • The offer of three Australian dollars per share was withdrawn due to increased difficulties in completing the deal.

  • Lithium is in high demand for electric vehicles and other applications, making it a valuable commodity despite recent price fluctuations.

  • Albemarle sought to expand its lithium production by acquiring Liontown, which is developing the Kathleen Valley lithium project in Western Australia.

  • Liontown had agreements to supply lithium to companies like Ford Motor and Tesla.

  • Western Australia is rich in commodities, and the region plays a significant role in global mining.

  • Gina Rinehart's wealth is estimated at $25.6 billion, while Albemarle's market value is around $19 billion.

  • Hancock Prospecting, when building its stake in Liontown, mentioned Kathleen Valley's significance as a lithium asset but also cautioned about risks and rising project costs.

  • The global lithium market has grown substantially, with a market worth approximately $48 billion in sales last year.

  • Deal-making in the lithium sector has increased, with companies like Livent and Exxon Mobil making significant moves.

  • Albemarle faced challenges in persuading Liontown to open its books before the deal was eventually deemed too complex and abandoned.

  • Marathon Oil Corporation enters a five-year firm LNG sales agreement with Glencore Energy UK Ltd for Alba Field gas in Equatorial Guinea.

  • The agreement becomes effective from January 1, 2024.

  • Pricing for the LNG sales agreement is linked to the Dutch Title Transfer Facility (TTF) index, with a fixed transportation fee.

  • Marathon Oil expects significant exposure to the European LNG market through this agreement.

  • The company plans to optimize its operations in 2024 by redirecting a portion of natural gas from the methanol facility to the LNG facility.

  • The new sales agreement is expected to result in an approximate year-on-year EBITDA increase of over $300 million for Marathon Oil.

  • Marathon Oil aims to advance the E.G. Gas Mega Hub and explore additional opportunities, including infill development wells and third-party Aseng gas cap monetization.

  • Glencore PLC expresses its commitment to growing and diversifying its LNG portfolio through this deal.

  • TPG Rise Climate is set to acquire AmSpec Group, Inc., a leading Testing, Inspection, and Certification (TIC) company in energy, commodities, and fuels.

  • AmSpec operates globally with over 300 inspection sites and laboratories across 61 countries.

  • Their core services involve testing and certifying fuel and commodity performance and emission qualities throughout the value chain.

  • AmSpec plays a crucial role in emissions control for conventional fuels and promotes the use of biofuels, hydrogen, sustainable aviation fuel, and other alternatives.

  • TPG Rise Climate's investment will facilitate the certification of renewable fuels in a changing global energy landscape.

  • Marc Mezvinsky, a TPG Partner, will join AmSpec's Board of Directors, along with other members from TPG Rise Climate.

  • Tracy Wolstencroft, a TPG Senior Advisor and former CEO of the National Geographic Society, will also be on the board.

  • Olympus Partners, AmSpec's majority shareholder, will retain a minority interest in the company.

  • AmSpec aims to expand its services and lead the energy transition with the support of TPG Rise Climate.

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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.