The “War on Infrastructure”

ECP-backed Harvestone has begun CO2 sequestration in North Dakota

• Harvestone Low Carbon Partners (HLCP), a portfolio company of Energy Capital Partners (ECP), has initiated carbon dioxide (CO2) injection at its Blue Flint Ethanol carbon capture and storage (CCS) project facility near Underwood, North Dakota.

• CO2 injection started in October 2023 after receiving approval from the North Dakota Department of Mineral Resources.

• Blue Flint is the first facility in the United States to actively capture and inject CO2 following the passage of the Inflation Reduction Act.

• The Blue Flint Ethanol plant generates over 200,000 metric tonnes of CO2 annually as a byproduct of fermentation and is capturing 100% of these emissions, injecting approximately 600 metric tons of CO2 daily into the Broom Creek formation, located about one mile underground.

• This initiative is part of Vision Carbon ZERO, a broader effort by Harvestone to reduce carbon intensity in fuel to zero, contributing to greenhouse gas emission reduction and sustainable energy development.

• Energy Capital Partners (ECP) is supporting HLCP’s vision for renewable energy that benefits local communities, emphasizing their commitment to clean energy investments.

• CCS involves capturing CO2 from stationary sources, compressing it into a liquid, and injecting it deep underground via a Class VI injection well for permanent geologic storage.

• North Dakota obtained primacy from the U.S. Environmental Protection Agency (EPA) for CCS in 2018, with Wyoming following suit in 2020.

CRC’s Carbon TerraVault announces updates on CCUS operations

• Carbon TerraVault (CTV), a subsidiary of California Resources Corporation (CRC), provides an update on its carbon management operations.

• CRC’s President and CEO, Francisco Leon, highlights their progress in the third quarter, including announcing California’s first 100,000 metric tons per year fully integrated capture to storage project.

• CTV signed a storage-only Carbon Dioxide Management Agreement (CDMA) with NLC Energy LLC (NLCE) for a minimum volume commitment of 150,000 metric tons per year of CO2 injection.

• CTV’s total projected CO2 injection rate is now 1,065,000 metric tons per year, targeting 655,000 MTPA in the San Joaquin Basin and 410,000 MTPA in the Sacramento Basin.

• CTV’s total submitted storage capacity under permits to the EPA is 191 million metric tons (MMT).

• Plans are announced to construct a capture to storage facility at the CTV Clean Energy Park in Kern County, California, removing 100,000 MTPA of associated CO2 from inlet gas used for Elk Hills Power Plant.

• The project aims to improve operational efficiency, propane recovery, and reduce carbon intensity in electricity generation.

• Estimated capital required for the project is $10 – $15 million, and it targets 45Q credit generation and LCFS qualification.

• NLC Energy LLC enters a CDMA with CTV JV to sequester a minimum of 150,000 MTPA of CO2 at the CTV I reservoir, producing renewable natural gas (RNG) from biomass.

• CRC has submitted 6 Class VI permits to the EPA for a total projected storage capacity of 191 MMT and expects to receive its first draft EPA Class VI permit by year-end.

Kinder Morgan acquires STX Midstream from NextEra for $1.8 billion

• Kinder Morgan (KMI) to acquire NextEra Energy Partner’s STX Midstream for $1.815 billion.

• STX Midstream includes 462 miles of high-pressure natural gas pipelines.

• The acquisition includes a 90% interest in the NET Mexico pipeline, with the remaining 10% owned by MGI Enterprises (a PEMEX affiliate).

• STX Midstream operates Eagle Ford Midstream, a 158-mile residue line connecting Eagle Ford basin to Agua Dulce Hub.

• STX Midstream also owns a 50% interest in Dos Caminos LLC, with the other 50% owned by Howard Energy Partners (HEP).

• The assets have an average contract length of over 8 years, with approximately 75% supported by take-or-pay contracts.

Brookfield increases takeover offer of Australia’s Origin Energy to $10.5 billion

• A consortium led by Brookfield Asset Management has increased its takeover offer for Australia’s Origin Energy to around US$10.50 billion.

• The consortium’s revised offer values Origin at A$16.41 billion, offering A$9.53 per share, which is 8% higher than the initial bid of A$8.81 per share made in March.

• Origin shareholders are set to vote on the transaction on November 23, but AustralianSuper, holding a nearly 14% stake and the largest shareholder in Origin, rejected the latest offer and plans to vote against it.

• Brookfield and EIG Global Energy Partners, the main consortium partner, aim to break up Origin if they gain control, with Brookfield seeking the power-generation division and EIG’s MidOcean Energy unit targeting the LNG business.

• The consortium argues that the deal will benefit Australia by accelerating the transition to cleaner energy.

• Last month, the deal received approval from Australia’s antitrust regulator, prioritizing the commitment to renewable energy investment over competition concerns.

Financial Times piece on the “war on infrastructure”

• EQT chief executive Toby Rice, the largest US natural gas producer, criticizes the opposition to new pipelines in the US, describing it as a “war on infrastructure” that could lead to an energy crisis similar to Europe’s.

• He highlights the abundance of natural gas in the US but points out that new pipeline capacity is being blocked, hindering companies’ efforts to add supplies.

• Rice believes that lawsuits, pushback, and efforts to cancel energy infrastructure projects are compromising the industrial world and reducing flexibility.

• The delay to the Mountain Valley Pipeline (MVP) is cited as an example of such challenges, with initial expectations of completion in 2018 and a cost of $3.5 billion, now costing $7.2 billion and scheduled to begin operations next year.

• Congress passed a law to fast-track MVP construction in June, but broader attempts to streamline permitting processes have failed in Congress over the past two years.

• Rice warns that the US could face an energy crisis akin to Europe’s due to infrastructure challenges, emphasizing the importance of building necessary energy infrastructure.

• Opponents of the MVP project argue that it poses risks to properties and ecosystems and prolongs fossil fuel industry reliance, contributing to climate change.

• The US has seen a significant decline in the build-out of interstate natural gas pipelines, raising concerns about gas supply constraints.

• Pipeline capacity constraints have the potential to affect gas flows from Appalachia to New England and lead to price spikes, similar to Boston’s gas prices reaching $30 per million British thermal units during the winter.

• Consultancy Wood Mackenzie suggests that a failure to build new pipelines in the northeast could increase gas prices, reduce demand, and accelerate the energy transition away from gas in that market.

• Permitting processes have become highly politicized in some states, leading to challenges for pipeline projects.

Doesn’t matter if it’s natural gas or even CO2, it’s incredibly difficult to get new infrastructure built in this country. Pretty much impossible.

It was sad to see Navigator CO2 close shop. For all the criticism on CCUS and whether it will work, we never even got far along enough to test the thesis. It was merely a case of opposition to pipe.

Coal-to-gas switching presents an obvious opportunity to decarbonize the US power grid. And much needed if we’re going to electrify everything.

Enbridge acquires $1.2 billion of landfill RNG from Morrow Renewables

• Enbridge announces a $1.2 billion transaction with Morrow Renewables, establishing itself as a major North American RNG (Renewable Natural Gas) midstream operator.

• The purchase includes seven operational landfill gas-to-RNG facilities, boosting Enbridge’s position in the renewable energy sector.

• These assets are integral to Enbridge’s energy transition goals and contribute to a cleaner energy future.

• The landfill RNG facilities are located in six Texas locations and Fort Smith, Arkansas, strategically placed near growing demographics and landfill sites.

• These facilities capture and process gas generated by landfill waste decomposition, converting it into pipeline-grade methane RNG.

• The RNG can be blended into existing natural gas networks for various applications, including transit fleets, industrial facilities, and residential heating.

• These seven facilities collectively produce approximately 5 billion cubic feet of RNG annually, with long-term contracts and offtake agreements ensuring financial stability.

• Enbridge aims to lead in low-carbon energy sources, including RNG, to meet increasing demand from gas utilities.

KKR raised $2.8 billion for second global impact fund

• Private equity firm KKR & Co Inc has successfully raised $2.8 billion for its second global impact fund focused on sustainability and social equity.

• The fund, led by Ken Mehlman and Robert Antablin, attracted more than double the commitments of its first $1.3 billion impact fund from 2020.

• KKR’s resiliency and growth are attributed to tailwinds such as the shift towards cleaner energy, resource recycling, and workforce development.

• Investments within the impact fund must align with at least one of the United Nations’ 17 sustainable development goals.

• The fund can invest alongside KKR’s other private equity funds, but it primarily operates independently.

• KKR’s global impact team, which has expanded from four members in 2018 to over 20, has made 18 investments, including CoolIT Systems, CMC Packaging Automation, Graduation Alliance, and Five Star.

• KKR’s first impact fund delivered returns 1.6 times the investors’ money by June, according to the firm’s recent quarterly earnings disclosure.

• KKR has also introduced initiatives like ‘Ownership Works,’ distributing stock to employees of portfolio companies to advance economic savings.

NEOM invests in REGENT’s Series A

• NEOM Investment Fund (NIF) makes a significant investment in REGENT, a US-based electric seaglider manufacturer.

• NEOM becomes the largest single contributor in REGENT’s Series A funding round, aiming to advance electric seaglider technology.

• The partnership involves establishing a regional R&D and training hub and supporting NEOM’s efforts to lead and localize electric seaglider technology.

• NEOM aims to develop a sustainable and integrated mobility system in northwest Saudi Arabia, aligning with Saudi Vision 2030.

• REGENT will establish a Middle East R&D and Training Hub and provide work placements for young Saudi engineering and tech graduates from NEOM starting in 2024.

• The collaboration focuses on solving operational details and advancing sustainable transportation using seagliders.

• NEOM’s goal is to create a carbon-free community and be a testbed for future technology while building a sustainable mobility system.

• Seagliders combine aircraft speed with boat convenience, operating on hydrofoils and flying above the water’s surface at high speeds.

• REGENT’s flagship seaglider, the 12-passenger Viceroy, promises a unique customer experience and comfort.

Toyota is making an additional $8 billion investment in hybrid and EV battery factory in North Carolina

• Toyota is making an additional $8 billion investment in its hybrid and electric vehicle battery factory in North Carolina.

• This investment will more than double the prior investments and create about 3,000 additional jobs, bringing the total to over 5,000 jobs when the plant begins operations in 2025.

• The North Carolina facility will serve as Toyota’s lithium-ion battery production hub in North America and supply batteries to the Kentucky-based plant for U.S.-made electric vehicles.

• This marks Toyota’s fourth and largest investment in the North Carolina facility, totaling around $13.9 billion, supporting its goal of selling 1.5 to 1.8 million electric or hybrid vehicles in the U.S. by 2030.

• Eight new production lines for electric and plug-in hybrid batteries will be added.

• Toyota commits to using 100% renewable energy for battery production at the plant.

• The automaker plans to have 15 battery electric vehicles for sale globally by 2025.

• The U.S. is increasing efforts to bolster domestic supply chains for electric vehicle components, including batteries and computer chips, to meet rising demand.

• Toyota’s latest investment is expected to have a positive economic impact on the Greensboro-area economy in North Carolina.

• The state and local governments may provide incentives, tax breaks, and infrastructure upgrades to support Toyota’s investment and job creation goals.

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.