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:
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Concerns grow over potential Australian LNG export diversion
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UK’s Newcleo to raise $1.1 billion to build nuclear reactors
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Quote of the week – Shell CEO on energy transition
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LNG
Source: PR Newswire
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Sempra has announced a final investment decision for the Port Arthur LNG Phase 1 project in Jefferson County, Texas.
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Sempra Infrastructure has closed a joint venture with ConocoPhillips and an infrastructure fund managed by KKR will acquire a non-controlling interest in the project.
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The project has secured a $6.8 billion non-recourse debt financing and a final notice to proceed under the project’s engineering, procurement and construction agreement has been issued.
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The project is fully permitted and designed to include two natural gas liquefaction trains, two liquefied natural gas (LNG) storage tanks and associated facilities with a nameplate capacity of approximately 13 million tonnes per annum.
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The project’s long-term contractable capacity of approximately 10.5 Mtpa is fully subscribed under binding long-term agreements with strong counterparties.
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Sempra is also actively marketing and developing the competitively positioned Port Arthur LNG Phase 2 project, which is expected to have similar offtake capacity to Phase 1.
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ConocoPhillips has acquired a 30% non-controlling interest in the project and will purchase 5 Mtpa of LNG offtake from the project under a 20-year sale and purchase agreement.
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KKR will acquire a 25% to 49% indirect, non-controlling interest in the project, and Sempra Infrastructure is targeting 20% to 30% of indirect ownership interest in the project, subject to the closing of the KKR sale.
LOW-CARBON FUELS
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CF Industries Holdings has agreed to buy Incitec Pivot Limited’s Waggaman ammonia production facility in Louisiana for $1.675 billion.
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The ammonia plant has a nameplate capacity of 880,000 tons per year and is currently distributed ratably to 3 customers, including Dyno Nobel.
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CF Industries will allocate $425 million of the purchase price to a long-term ammonia offtake agreement under which CF Industries will supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel subsidiary.
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The remaining $1.25 billion of the purchase price will be funded by CF Industries with cash on hand.
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CF Industries expects to capture synergies through greater capacity utilization and operational and logistics optimization, and plans to implement carbon capture and sequestration technologies at the site.
CARBON CAPTURE
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Strategic Biofuels has completed the filing of its Class VI Carbon Sequestration Well Permit Application with the U.S. Environmental Protection Agency (EPA) and the Louisiana Department of Natural Resources (LDNR) for the Louisiana Green Fuels Project.
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The application integrates data collected during the drilling and testing of the Company’s Louisiana Green Fuels Class V Stratigraphic Test Well, geological and geophysical mapping of the region, and modeling.
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The approval of the application will allow the Project to move forward with drilling 3 injection wells and several reservoir monitoring wells, and the construction of a renewable diesel refinery and adjacent power plant.
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The Project aims to produce deeply carbon-negative liquid fuel and operate completely “off the grid.”
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The proposed plant’s ability to achieve deep carbon negativity is highly dependent on its ability to sequester nearly 1.4 million metric tons of CO2 annually, which will be a byproduct of the renewable diesel fuel refinery process and the green power generated to operate the plant.
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The company has worked closely with both the EPA and the LDNR, which have concurrently received the Class VI Permit Application, and the LDNR has applied to the EPA for “primacy” to issue such permits.
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The security of the storage reservoir has been further enhanced by Caldwell Parish-specific legislation signed into law last year that will prohibit third party drilling through the impervious shales that will form the top seal of the CO2 reservoirs.
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The drilling and testing of the critically important Class V Stratigraphic Test Well at the beginning of the Project distinguishes it from most other proposed sequestration projects in Louisiana.
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Strategic Biofuels has recently achieved other major milestones, including the Groundbreaking Ceremony for construction of infrastructure improvements at the Port of Columbia, the licensing of Johnson Matthey-bp’s advanced Fischer-Tropsch technology, and being invited by the U.S. Department of Energy’s Loan Programs Office to submit a Part II application for a proposed $1.6 billion loan guarantee.
RENEWABLES
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Google and LevelTen Energy have piloted a new approach that reduces the time to negotiate and execute a clean energy power purchase agreement (PPA) by roughly 80%
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Traditional Request for Proposal (RFP) negotiations for carbon-free energy transactions are lengthy, complex, and unique.
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RFP conversations can drag on for more than a year, increasing the cost for both buyers and sellers, which creates unnecessary barriers for both buyers and sellers to develop clean energy portfolios.
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In partnership with LevelTen, Google has established a new, scalable procurement approach that breaks down the barriers of traditional RFPs to benefit both parties while accelerating grid decarbonization.
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Google and LevelTen have achieved this by zeroing in on two areas of improvement — the RFP process and the PPA contract itself.
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These changes significantly shorten the start-to-finish time of executing clean energy PPAs, from traditional deals that can take more than a year, to just two months with this innovative approach.
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A significantly faster and easier RFP process for clean energy deals will help standardize the buying and selling of clean energy, making it easier for all types of end-use buyers to purchase new additional carbon-free energy and expand the marketplace to create access for smaller sellers to participate.
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Innovation like this will accelerate the decarbonization of grids worldwide and enable a new standard for clean energy procurement.
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Google and LevelTen aim to make this approach widely available to buyers and sellers later this year and will continue to make improvements over time.
ENERGY SECURITY
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Equinor CEO says there is significant interest in long-term gas deals lasting between 3-10 years from European gas buyers.
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European countries are planning joint gas purchases to improve security of supply amid reduced flows from Russia.
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European Commission President hopes companies will sign longer-term deals.
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European short-term gas prices spiked to record highs last year but have since dropped to around 44 euros on Friday.
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Equinor hosted von der Leyen and Stoltenberg on a visit to the Troll A gas platform to discuss security of supply and infrastructure.
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Troll A gas platform supplies 11% of all gas consumed in the EU.
ENERGY SECURITY
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Australia’s east coast LNG exporters may need to divert excess gas supply to domestic customers to prevent supply shortages this winter.
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Despite increased production commitments since last year, supply in southern Australia is declining rapidly.
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AEMO recommends committed infrastructure and supply projects be completed on time, additional gas storage and pipeline development, and LNG import terminals to minimize shortfall risks.
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Risks of gas shortfalls from winter 2023 to 2026 in all southern jurisdictions remain under extreme weather conditions, further exacerbated if gas storage levels are insufficient.
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From 2026, Australia must expand its gas supply or have enough renewable projects to offset the demand for gas.
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Gas producers are reluctant to invest in new supply after government interventions in the market, which include proposals to impose a “reasonable pricing” regime on gas and expand the government’s ability to divert gas exports to the domestic market.
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Investment uncertainty over Australia’s first LNG import terminal, Squadron Energy’s Port Kembla, could also impact supply shortfall.
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Energy minister Chris Bowen rejects link between government intervention and investment uncertainty, saying almost all gas before 2022 was sold below the cap.
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Australia produces more gas than it needs to meet domestic demands, but most supply is contracted for export.
NUCLEAR
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UK-based nuclear company Newcleo plans to raise $1.1 billion to build a fleet of small nuclear reactors in the UK.
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The company recently signed an agreement with Italy’s biggest utility Enel to collaborate on providing safe and stable power.
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Newcleo aims to design and construct a mini lead fast reactor, to be deployed in France by 2030.
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In 2022, Newcleo raised $315.6 million and was in talks with French company Orano about moving into the French market.
RENEWABLES
Example floating solar project | Source: Duke Energy
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Duke Energy Corp’s Florida unit will begin construction of a 1 MW floating solar array pilot in Polk County, Florida later this month.
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The pilot will feature over 1,800 floating solar modules, occupying about 2 acres of water surface at the Hines Energy Complex in Bartow.
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1 MW solar powers approximately 173 homes, according to the Solar Energy Industries Association.
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Duke Energy recently increased its five-year capital plan to $65 billion, with 80% aimed at low-carbon energy.
But the energy system still faces huge challenges as high energy prices continue to contribute to a cost-of-living crisis for many people. These challenges have highlighted the need for a balanced energy transition: one in which the world achieves net-zero emissions, while still providing a secure and affordable supply of energy.
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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.