The Exchanges

Q I mean, what he's learned about building big clean energy projects, about what it was like to launch Project Cormorant, and what scaling challenges Eight Rivers still faces today. So you successfully deployed the AFC in the NetPower project, and now you've moved on to Project Cormorant. So can you talk about moving from electricity production into hydrogen production, and what was the genesis of this project that you're building?

A The project in Port Arthur, Project Cormorant, is based around a direct-fired, what we call CO₂ convective reformer. And so it has a looping CO₂ in it, similar to the AFC, where we're utilizing the CO₂ in this case to transfer heat to what we call the CO₂ convective reformer, rather than doing work through a turbine. So in the AFC, you're doing work through a turbine, then you're transferring heat. In this instance, we have a combustor married into a reformer, That reformer is using hot CO₂ to drive the reformation of natural gas and steam into hydrogen. And then the cold CO₂ is coming out and recycling back to the combustor, and we're able to take a slipstream of pure CO₂ out of the system for sequestration. And so, we looked at the hydrogen market and we said, well, The hydrogen, for the sake of hydrogen, doesn't seem to be working. You need to have something that's consuming hydrogen, and you hear a lot of people talk about, you know, the, the future hydrogen market. And we kind of looked at it pragmatically and said, well, there is an existing hydrogen market, and the existing hydrogen market centers around ammonia production and refining. Those are the two largest consumers of hydrogen in the world. Let's focus on how we can engage in those industries, and that's when we decided we were going to apply the ADERH-II system, which is our blue hydrogen production system, for t…

AI assessment note: “we decided we were going to apply the ADERH-II system... for the production of ammonia”

Q And is your plan to produce hydrogen or to fully produce ammonia? Are you working with a corporate partner on this one?

A We will be producing hydrogen. That hydrogen will go into what's called an ammonia loop to produce ammonia. So because we're doing oxy combustion, we need an air separation unit. That air separation unit will give us oxygen, but it also happens to To separate out the nitrogen from air. And to make ammonia, you need two things. You need hydrogen and nitrogen. We already have both of those components coming out of the ARH-II system, and so you add an ammonia loop on the back end, and then you can, you, you can synthesize the ammonia. And we're working with a company by the name of Casale, who specializes in ammonia production technology, as well as other kind of Nitrogen and ammonia products synthesis.

AI assessment note: “We will be producing hydrogen... we're working with a company by the name of Casale”

Q So say more about the origins of this project. So it sounds like one of the first things you did was to figure out a site, of course, after you're characterizing the economic potential for what you're building. What else did you do at the very beginning?

A Before you start a project, in our DNA, what we focus on is off-take first. And that off-take for that ammonia, the demand for the ammonia that we saw was coming from Korea. Uh, and with SK as an investor in Eight Rivers, you know, it became very likely that SK would be off-taking the ammonia from the project. Well, then political dynamics shifted and, and we started putting a lot of time and money into the project and, and then the political winds started shifting and timelines became longer. And suddenly this, this urgency to, to deploy that was once present, it became less urgent. And so we had more time, but also in this time, we had to work on finding new partners for the offtake. Of the ammonia, which we've had some success in doing. You know, the, the project is structured to produce 900,000 tons of ammonia, and we've, we found offtake for about 18% of that 900,000, and we're working on, on getting the rest of that ammonia offtake secured.

AI assessment note: “what we focus on is off-take first. And that off-take for that ammonia”

Q Okay, so, but let's go back to the beginning, where you were trying to convince these turbine manufacturers to effectively work with you and to build this thing for which you had defined the conditions. So, how did those conversations go? What was the proposition that you were bringing to them, and what was the initial response you were getting?

A The proposition was that these AFC systems were going to be the lowest cost systems that produced Reliable, twenty-four-seven electricity. And that there were other operational characteristics That would make them more competitive than any other type of generation on the market. The other characteristics is, is complex, and we don't need to get in, get into it too much, but like ancillary grid services like spinning reserves and peaking capacity and energy storage capacity and frequency regulation, those are all things that AFCs are uniquely capable of in addition to just Producing power. Um, and I think they can provide those ancillary grid services in ways that other systems can't or might only be able to provide one or two of those services where we, we, we see a path where we can provide all four and where in other gas turbines or steam turbines you would have to make some modifications or run the plant outside of its Ordinary course of operations where we can run within the ordinary course and still provide those services. So, so the reason I go into that, that was the value is the value proposition that we were saying, listen, these systems are the next generation of turbine. And there was also a very strong argument on the environmental side and, and the elimination of emissions and that this was better than using adsorbents on turbines. And so that was the argument. And…

AI assessment note: “The proposition was that these AFC systems were going to be the lowest cost systems”

Q the things that wound up changing. So you mentioned that some of the policy winds started shifting, and this affected, you know, ultimately your offtake agreement with SK in addition to how you sort of phased the development and the speed of development for the project. So can you say a bit more about what those policy winds were? Are you talking about in the U.S. or Korea or both?

A I would say on the Korea side, both in Korea and Japan, both countries, to their credit, have been significant advocates around lowering emissions. As well as utilization of alternative fuels or so-called zero carbon fuels. So those are fuels that don't contain any carbon molecules. So ammonia, if you produce it from some low to zero emissions hydrogen, you effectively could import molecules that are not importing any inherent or baked in CO₂. And, and so they've been really strong proponents. So in the U.S. with the CO₂ infrastructure that we have, And the ability to utilize CO₂ in the appropriate geology for sequestration of CO₂, we've been really good around developing policies to incentivize the capture and reduction of CO₂ emissions. On the other side, they also have policies around CO₂, but have also put in place policies to support the import of cleaner, lower carbon ammonia. And those policies required certain decisions that the government Level, and just like in the U.S. where, you know, a bill will be introduced but doesn't necessarily move fast, or even if it's passed, its implementation doesn't necessarily go quickly. I think that was the case in, in South Korea where the government needed some more time to further perfect its policies, and, and so that ended up delaying things a bit.

AI assessment note: “in South Korea where the government needed some more time to further perfect its policies”

Q So, Eight Rivers' biggest offtake contract for Project Cormorant fell apart. And as you heard Damien say earlier, the company always secures offtakes before moving forward with its projects. So, what did Eight Rivers do next? More about that after the break.

A The opportunity we found was that we could optimize, because the optimization only came after that of the ADRH-II system, and I don't think we would have implemented the optimization if we were still on that tight timeline, and who knows what we avoided by going to the better system with lower risk. We could have built the project, and you know, it could have been a disaster, where now we have a technology that's Much lower risk has kind of inherent failure modes where pieces fail. We actually have mitigation built into the plant, where the plant can continue producing revenue, even if one piece doesn't operate exactly how we want it to operate. And so that, I think, is a significant, a significantly positive outcome for us.

AI assessment note: “The opportunity we found was that we could optimize”