BlackRock bets big on DAC

BlackRock forms JV with Oxy to invest $550 million in DAC project

• 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 acquires Heartland Generation from Energy Capital Partners for $658 million

• 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 landfill RNG projects in North Carolina

• 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 SAF offtake agreement with USA BioEnergy

• 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.

TES and Tokyo Gas sign agreement to develop electric natural gas

• 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.

Conversation between Chevron CEO Mike Wirth and CNBC’s Brian Sullivan at American Energy Security Summit in OKC

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.