Exxon’s energy transition shopping spree

CARBON CAPTURE

Exxon buys leading CCS developer, Denbury, for $5 billion

• Exxon Mobil Corporation has announced its acquisition of Denbury Inc., a developer of carbon capture, utilization, and storage (CCS) solutions and enhanced oil recovery.

• The all-stock transaction is valued at $4.9 billion, with Denbury shareholders receiving 0.84 shares of ExxonMobil for each Denbury share.

• The acquisition strengthens ExxonMobil’s Low Carbon Solutions business and its commitment to low carbon value chains, including CCS, hydrogen, ammonia, biofuels, and direct air capture.

• ExxonMobil gains ownership of the largest CO2 pipeline network in the U.S., spanning 1,300 miles and strategically located onshore sequestration sites.

• The transaction synergies are expected to enable more than 100 million metric tons per year of emissions reductions over time.

• The acquisition also includes Gulf Coast and Rocky Mountain oil and natural gas operations with proved reserves of over 200 million barrels of oil equivalent and current production of 47,000 oil-equivalent barrels per day.

• The transaction is subject to regulatory reviews, approvals, and approval by Denbury shareholders, with an expected closing in the fourth quarter of 2023.

The rumor had circulated on this deal last year and now finally gets announced. This comes on the heels of Exxon making multiple lithium extraction acquisitions, a DAC pilot announcement, as well as a large CCS announcement with Nucor for low-carbon steel. 

NUCLEAR

Nuclear startup Oklo to go public via Sam Altman’s SPAC

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• Nuclear-fission startup Oklo, backed by Sam Altman of OpenAI, plans to go public through a merger with his special-purpose acquisition company (SPAC).

• The deal adds to recent SPAC mergers involving nuclear companies and tests investor appetite for clean-energy startups.

• Oklo is developing a small modular nuclear reactor design and aims to sell electricity in the competitive power market.

• Altman believes the nuclear-energy industry can provide electricity at a better deal than other sources.

• Oklo is valued at approximately $850 million in the transaction and will merge with AltC Acquisition, the SPAC co-founded by Altman and Michael Klein.

• Concerns exist about the potential conflict of interest when an investor takes their own company public through their SPAC.

• AltC holds $500 million in cash that Oklo could use to expand its business.

• Oklo plans to deliver its first reactors in Idaho and Ohio and is working on nuclear fuel-recycling technologies.

• Altman sees the goals of AI and energy abundance as connected, with AI systems requiring significant energy.

• Small modular reactor designs are being tested globally, aiming to be cheaper and faster to build compared to large-scale reactors.

• Investors in Oklo include Y Combinator, Sam Altman and 8090 Industries

FUNDRAISING

Copenhagen Infrastructure Partners raises $6 billion in latest green energy fund

• Danish green investment company Copenhagen Infrastructure Partners (CIP) has raised 5.6 billion euros ($6.13 billion) for its latest fund.

• CIP expects to meet its full target of 12 billion euros for the Copenhagen Infrastructure V (CI V) fund.

• CI V is set to become the world’s largest dedicated fund for renewable infrastructure.

• Investor demand for renewable infrastructure remains strong despite recent macro-economic challenges.

• Factors driving the demand include the competitiveness of renewable technologies, focus on energy independence, and net-zero pledges.

• The fund will focus on greenfield investments in large-scale renewable energy infrastructure in North America, Western Europe, and Asia Pacific.

• The target is to build approximately 20 gigawatts (GW) of new clean energy, equivalent to powering over 10 million average households and avoiding 15 million metric tons of CO2 annually.

• Investment allocation will be divided into one third offshore wind, one third onshore wind and solar power, and the remaining portion in niche technologies like energy storage and transmission.

HYDROGEN

Rio Tinto and Sumitomo are building a hydrogen pilot plant in Australia to decarbonize aluminum

• Rio Tinto and Sumitomo Corporation will build a hydrogen plant in Gladstone as part of a program to reduce carbon emissions from alumina refining.

• The Yarwun Hydrogen Calcination Pilot Demonstration Program received A$32.1 million in co-funding from the Australian Renewable Energy Agency (ARENA).

• The program aims to demonstrate the use of hydrogen in the calcination process, heating hydrated alumina to high temperatures.

• The project involves constructing a hydrogen plant at the refinery and retrofitting refinery processing equipment.

• Success could lead to global adoption of the technology at scale.

• The pilot plant will include a 2.5MW on-site electrolyser to supply hydrogen to the Yarwun refinery.

• The trial is expected to produce about 6,000 tonnes of alumina per year and reduce carbon dioxide emissions by about 3,000 tonnes per year.

• Converting the entire plant to green hydrogen could reduce emissions by 500,000 tonnes per year, equivalent to removing 109,000 cars from the road.

• Construction will start in 2024, with the plant and calciner expected to be operational by 2025.

• Sumitomo Corporation will own and operate the electrolyser (250 tonnes per year of production capacity), supplying hydrogen directly to Rio Tinto.

• Rio Tinto aims to achieve net zero emissions by 2050 and reduce Scope 1 & 2 emissions by 50% by 2030.

NATURAL GAS AND LNG

Berkshire Hathaway Energy acquires another 50% in Cove Point LNG for $3.3 billion

A three billion dollar energy deal? That’s just breakfast for Warren.

• Berkshire Hathaway Energy has acquired a 50% stake in the Cove Point liquefied natural gas (LNG) facility for $3.3 billion in cash.

• The purchase from Dominion Energy gives Berkshire Hathaway Energy a 75% limited partnership stake in Cove Point LNG, located in Maryland. Brookfield Infrastructure Partners holds the remaining 25%.

• The deal strengthens Berkshire Hathaway’s bet on energy infrastructure and ownership of one of the few operational LNG exporters in the US.

• Cove Point LNG has a storage capacity of 14.6 billion cubic feet and a daily send-out capacity of 1.8 billion cubic feet, with a long-term contract with Sumitomo Corp.

• Berkshire Hathaway previously acquired Dominion’s gas pipeline and storage assets for $4 billion in 2020.

• Greg Abel, chairman of Berkshire Hathaway Energy, spearheaded the deal and is seen as the successor to Warren Buffett.

• Berkshire Hathaway has been increasing its investments in renewable energy while also expanding exposure to traditional energy companies like Occidental Petroleum and Chevron.

• The acquisition of Cove Point LNG aligns with Berkshire Hathaway’s strategy of investing in infrastructure assets with steady cash flows.

NextDecade makes positive FID on Phase 1 of Rio Grande LNG

• NextDecade Corporation has made a positive final investment decision (FID) to construct the first three liquefaction trains (Phase 1) at its Rio Grande LNG (RGLNG) export facility in Texas.

• The joint venture agreement for Phase 1 includes approximately $5.9 billion in financial commitments from Global Infrastructure Partners (GIP), GIC, Mubadala Investment Company, and TotalEnergies.

• NextDecade will invest approximately $283 million in Phase 1, with additional financing including senior secured non-recourse bank credit facilities and a private placement notes offering.

• The project financing for RGLNG Phase 1 amounts to $18.4 billion, making it the largest greenfield energy project financing in U.S. history.

• Bechtel Energy Inc. has been given the notice to proceed (NTP) to begin construction of Phase 1 under its engineering, procurement, and construction contracts.

• Phase 1 will have a liquefaction capacity of 17.6 million tonnes per annum (MTPA) and has long-term binding LNG sale and purchase agreements with various companies.

• NextDecade holds equity interests entitling the company to receive up to 20.8% of the cash flows generated by Phase 1 during operations.

• Financial Investors and TotalEnergies hold equity interests entitling them to a minimum of 62.5% and 16.7% of the cash flows generated by Phase 1, respectively.

• NextDecade aims to deliver the full five-train RGLNG project over time, with options for its partners to invest in additional trains and a carbon capture and sequestration project.

• The project financing transactions were supported by legal counsel and financial advisors.

• NextDecade is focused on constructing Phase 1, expanding its LNG platform, and creating jobs in the Rio Grande Valley community.

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.