Tidewater Midstream and Infrastructure Ltd. is pleased to provide an update on various renewable energy initiatives it has been undertaking over the past 6-12 months. These initiatives include opportunities in renewable diesel, coprocessing, renewable hydrogen, blue hydrogen, renewable natural gas, carbon capture, and other various renewable energy projects (together the “Renewable Initiatives”).
Renewable Diesel and Renewable Hydrogen Project
Tidewater’s largest current Renewable Initiative is a 3,000 barrels per day renewable diesel and renewable
hydrogen complex located on the site of Tidewater’s existing Prince George Refinery in BC (the “PGR”),
for an estimated total project cost of $215 to $235 million. The renewable diesel and renewable hydrogen complex will be a stand-alone renewables complex focused on 100% renewable feedstock and will include a pretreatment facility to provide Tidewater significant flexibility on running various renewable feedstocks. Tidewater has received BC government commitments of approximately $100 million in the form of BC Low Carbon Fuel Standard Credits (based on the current market value) for the construction of the complex, representing approximately 45% of the mid-point total project cost of approximately $225 million. Project funding is predicated on management’s current estimate of the asset generating over $75 million of EBITDA in its first year of operations, which is anticipated as early as 2023, and excludes any incremental EBITDA upside from hydrogen production and the credit value associated with the Canadian Clean Fuel Standard. The consumer use of the produced renewable diesel and renewable hydrogen is expected to reduce carbon intensity and related GHG emissions by approximately 80-90% and 65-75% respectively, versus conventional diesel which represents the equivalent of removing approximately 70,000 – 80,000 vehicles from the road annually. Tidewater is working through additional means to further reduce the carbon intensity of the renewable diesel to be produced.
Tidewater is completing a canola co-processing project for approximately $10 million in capital, that is expected to commence operations in the fourth quarter of 2021 and is currently estimated to generate over $5 million of EBITDA per year. Tidewater also expects to complete a Fluid Catalytic Cracking (“FCC”) co-processing project at the PGR, for an approximate $10 million in capital, during the next scheduled refinery turnaround in the Spring of 2023. Project funding of the FCC co-processing project is predicated on management’s current estimate of the asset generating over $5 million of annualized EBITDA once it commences operations. Both co-processing projects have received material BC government support in the form of BC Low Carbon Fuel Standard credits that significantly reduce Tidewater’s net capital contribution. The renewable diesel and renewable gasoline produced by the co-processing projects will have a carbon intensity of approximately 80-90% less than conventional fuels.
Tidewater is grateful to have received early support from the Provincial and Federal governments on these various opportunities. Tidewater’s existing assets in BC and Alberta provide the Company with a strategic advantage in relation to the increasing federal carbon tax, Canadian Clean Fuel Standards credits, and BC Low Carbon Fuel Standard credits.
Tidewater is also pursuing other Renewable Initiatives that are at various stages of development. These initiatives are expected to increase the size and scale of the company’s renewable portfolio, and to concurrently add to EBITDA with attractive investment returns.
“We are pleased and excited at Tidewater to continue our effort in carbon reduction through the development of our Renewable Initiatives,” said Joel MacLeod, Tidewater Chairman and Chief Executive Officer. “The support shown by the BC and federal governments has been tremendous and we are thankful for the confidence they placed on our renewable energy projects.”
“Tidewater’s renewable energy initiatives show BC’s Low Carbon Fuel Standard in action. Credits from the program are supporting projects that will lead to the production of more renewable fuels, while generating new jobs and economic opportunities from BC’s resources,” said Bruce Ralston, Minister of Energy, Mines and Low Carbon Innovation. “Fuel suppliers have a vital role to play in our government’s plans to reduce greenhouse gas emissions from transportation fuels and achieve our climate targets. I applaud Tidewater’s efforts and investments to advance these innovative projects.”
Tidewater continues to evaluate options to fund its Renewable Initiatives without incurring additional corporate indebtedness, with the Company’s primary objective remaining to deleverage through 2021.
In connection with these efforts, Tidewater has engaged CIBC Capital Markets and National Bank Financial Inc. as financial advisors to assist the Company in understanding the available external financing alternatives to further advance the Renewable Initiatives in an accretive and deleveraging manner.