10-K
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d103808d10k.htm
FORM 10-K
Form 10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
For the fiscal year ended December 31, 2020;
or
For the transition period
from to
Commission File No. 001-39919
MONTAUK RENEWABLES, INC.
(Exact name of registrant as specified in its charter)
680 Andersen Drive, 5th Floor, Pittsburgh, PA 15220
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (412)
747-8700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, par value $0.01 per share MNTK The Nasdaq Capital Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☐ No ☒*
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer ☐ Accelerated Filer ☐
Non-accelerated filer ☒ Smaller Reporting Company ☐
Emerging Growth Company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes ☐ No ☒
As of June 30, 2020, the last business day of the
registrant’s most recently completed second fiscal quarter, the registrant did not have a public float because there was no established public market for the registrant’s common stock. As of March 17, 2021, the aggregate market value
of shares of common stock held by non-affiliates of the registrant was $577,574,415.
The number of outstanding
shares of the registrant’s common stock on March 17, 2021 was 142,157,835 shares.
DOCUMENTS
INCORPORATED BY REFERENCE
The information required by Part III of this Annual Report on Form 10-K, to the
extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the registrant’s Annual Meeting of Stockholders to be held in 2021 (the “Proxy Statement”), which
definitive proxy statement shall be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2020.
Table of Contents
TABLE OF CONTENTS
Page
PART I 1
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 30
ITEM 1B. UNRESOLVED STAFF COMMENTS 57
ITEM 2. PROPERTIES 57
ITEM 3. LEGAL PROCEEDINGS 58
ITEM 4. MINE SAFETY DISCLOSURES 58
ITEM 6. SELECTED FINANCIAL DATA 61
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 79
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 81
ITEM 9A. CONTROLS AND PROCEDURES 118
ITEM 9B. OTHER INFORMATION 119
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 119
ITEM 11. EXECUTIVE COMPENSATION 119
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 120
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 120
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Glossary of Key Terms
This Annual Report on Form 10-K uses several terms of art that are specific to our industry and
business. For the convenience of the reader, a glossary of such terms is provided here. Unless we otherwise indicate, or unless the context requires otherwise, any references in this Annual Report on Form 10-K
to:
• “ADG” refers to anaerobic digested gas.
• “CARB” refers to the California Air Resource Board.
• “CNG” refers to compressed natural gas.
• “CI” refers to carbon intensity.
• “CWCs” refers to cellulosic waiver credits.
• “D3” refers to cellulosic biofuel with a 60% GHG reduction requirement.
• “D5” refers to advanced biofuels with a 50% GHG reduction requirement.
• “EHS” refers to environment, health and safety.
• “EIA” refers to the U.S. Energy Information Administration.
• “EPA” refers to the U.S. Environmental Protection Agency.
• “FERC” refers to the U.S. Federal Energy Regulatory Commission.
• “GHG” refers to greenhouse gases.
• “JSE” refers to the Johannesburg Stock Exchange.
• “LCFS” refers to Low Carbon Fuel Standard.
• “LFG” refers to landfill gas.
• “LNG” refers to liquefied natural gas.
• “PPAs” refers to power purchase agreements.
• “RECs” refers to Renewable Energy Credits.
• “RFS” refers to the EPA’s Renewable Fuel Standard.
• “RINs” refers to Renewable Identification Numbers.
• “RNG” refers to renewable natural gas.
• “RPS” refers to Renewable Portfolio Standards.
• “RVOs” refers to renewable volume obligations.
• “WRRFs” refers to water resource recovery facilities.
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Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” that involve
substantial risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to
our financial condition, results of operations, plans, objectives, strategies, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,”
“expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,”
“seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.
For example, all statements we make relating to our estimated and projected costs, expenditures, and growth rates, our plans and objectives for future operations, growth, or initiatives, or strategies are forward-looking statements. All
forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect and, therefore, you should not unduly rely on such statements. The risks and uncertainties that could
cause those actual results to differ materially from those expressed or implied by these forward-looking statements include but are not limited to:
• dependence on third parties for the manufacture of products and services;
• identifying suitable locations for new projects;
• our projects not producing expected levels of output;
• concentration of revenues from a small number of customers and projects;
• dependence on our landfill operators;
• our outstanding indebtedness and restrictions under our credit facility;
• our ability to extend our fuel supply agreements prior to expiration;
• our ability to meet milestone requirements under our PPAs;
• profitability of our planned livestock farm projects;
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• sustained demand for renewable energy;
• security threats, including cyber-security attacks;
• the need to obtain and maintain regulatory permits, approvals and consents;
• potential liabilities from contamination and environmental conditions;
• failure of our information technology and data security systems;
• increased competition in our markets;
• continuing to keep up with technology innovations;
• an active trading market for our common stock may not develop;
We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While
we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.
See the “Risk Factors” section and elsewhere in this report for a more complete discussion of the risks and uncertainties mentioned
above and for discussion of other risks and uncertainties we face that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. All forward-looking statements attributable to us are
expressly qualified in their entirety by these cautionary statements as well as others made in our other Securities and Exchange Commission (“SEC”) filings and public communications. You should evaluate all forward-looking
statements made by us in the context of these risks and uncertainties.
We caution you that the risks and uncertainties identified by us
may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement
as a result of new information, future events, or otherwise, except as required by law.
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PART I
ITEM 1. BUSINESS.
Unless the context requires otherwise, references to “Montauk,” the “Company,” “we,” “us” or
“our” refer to Montauk Renewables, Inc. and its consolidated subsidiaries.
Company Overview
Overview
We are a renewable energy
company specializing in the recovery and processing of biogas from landfills and other non-fossil fuel sources for beneficial use as a replacement to fossil fuels. We develop, own, and operate RNG projects,
using proven technologies that supply renewable fuel into the transportation and electrical power sectors. We are one of the largest U.S. producers of RNG, having participated in the industry for over 30 years. We established our operating portfolio
of 12 RNG and three Renewable Electricity projects through self-development, partnerships, and acquisitions that span six states and have grown our revenues from $33.8 million in 2014 to $100.4 million in 2020.
Biogas is produced by microbes as they break down organic matter in the absence of oxygen (during a process called anaerobic digestion). Our
two current sources of commercial scale biogas are LFG or ADG. We typically secure our biogas feedstock through long-term fuel supply agreements and property lease agreements with biogas site hosts. Once we secure long-term fuel supply rights, we
design, build, own, and operate facilities that convert the biogas into RNG or use the processed biogas to produce Renewable Electricity. We sell the RNG and Renewable Electricity through a variety of short-, medium-, and long-term agreements.
Because we are capturing waste methane and making use of a renewable source of energy, our RNG and Renewable Electricity generate valuable Environmental Attributes which we are able to monetize under federal and state initiatives.
Based on our analysis, we believe there are numerous sources of waste methane in the United States that could serve as potential future
project opportunities. We expect to continue our growth through optimization of our current project portfolio, securing greenfield developments and acquiring existing projects, all while pursuing vertical integration opportunities. Our successful
evaluation and execution of project opportunities is based on our ability to leverage our significant industry experience, relationships with customers and vendors, access to interconnections for rights-of-way, and capabilities to construct pipeline and electrical interconnections that ensure the economic viability of opportunities we pursue. We exercise financial discipline in pursuing these projects
by targeting project returns that are in line with the relative risk of the specific projects and associated feedstock costs, offtake contracts and any other related attributes that can be monetized.
Our current operating projects generate RNG from landfill sites and livestock farms. We view livestock farms as a significant opportunity for
us to expand our RNG business and we are also evaluating other agricultural markets. We believe that our business is highly scalable, which will allow us to continue to grow through development and acquisitions.
Our projects provide our landfill and livestock farm partners with a variety of benefits, including a means to monetize biogas from their
sites, support their regulatory compliance, and provide them with environmental services. We differentiate ourselves from our competitors based on our long history of working with leading vendors and technologies and through our extensive expertise
in designing, tuning and managing gas control collection systems at our host sites. We have significant experience with commercialized beneficial uses of processed biogas, including pipeline quality natural gas, power generation, carbon capture and
boiler fuel gas products.
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Our revenues are generated from the sale of RNG and Renewable Electricity, under long-term
contracts, along with the Environmental Attributes that are derived from these products. RNG has the same chemical composition as natural gas from fossil sources, but has unique Environmental Attributes assigned to it due to its origin from low-carbon, renewable sources, which we can also monetize. Virtually all of the RNG we produce is used as a transportation fuel because this market generally provides the most value for our RNG production. The RNG
we process is pipeline-quality and can be used for transportation fuel when converted to CNG or LNG. CNG has been the most common fuel used by fleets where medium-duty trucks are close to the fueling station, such as city fleets, local delivery
trucks, and waste haulers. The Environmental Attributes that we sell are composed of RINs and state low-carbon fuel credits, which are generated from the conversion of biogas to RNG that is used as a
transportation fuel, as well as RECs generated from the conversion of biogas to Renewable Electricity. In addition to revenues generated from our product sales, we also generate revenues by providing operations and maintenance services to certain of
our biogas site partners.
Whenever possible, we seek to mitigate our exposure to commodity and Environmental Attribute pricing
volatility. Through contractual arrangements with our site hosts and counterparties, we typically share pricing and production risks while retaining our ability to benefit from potential upside. A significant portion of the RNG volume we produce is
sold under bundled fixed-price arrangements for the RNG and Environmental Attributes, with a sharing arrangement where we benefit from prices above certain thresholds. For our remaining RNG projects, we sometimes enter into in-kind sharing arrangements where our partners receive the Environmental Attributes instead of a cash payment, thereby sharing in the Environmental Attribute pricing risk.
We strive to sell our remaining RNG and environmental products under medium-and long-term indexed
pricing and margin sharing arrangements designed to give us optimal price and revenue certainty. On the electricity side, all of our products and related Environmental Attributes are sold under fixed-price contracts with escalators, limiting our
pricing risk. Finally, our payments to our site hosts are entirely in the form of royalties based on realized revenues, or, in some select cases, based on production volumes.
The Montauk Model
Reorganization Transactions
Montauk Holdings Limited, a corporation formed under the laws of the Republic of South Africa (“MNK”), was a holding company whose
ordinary shares were traded on the Johannesburg Stock Exchange (“JSE”) under the symbol “MNK.” Prior to the initial public offering (the “IPO”) of our common stock, 100% of MNK’s
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business and operations were conducted through its U.S. subsidiaries, including Montauk Holdings USA, LLC (“Montauk USA”) and Montauk Energy Holdings LLC (“MEH”), and it held
no assets other than the equity of its subsidiaries.
On January 4, 2021, we entered into a share exchange with Montauk USA in which
we replaced Montauk USA as the top tier subsidiary of MNK and we became the direct parent company of MEH. On January 26, 2021, prior to the completion of the IPO, of all of the outstanding shares of Company common stock was distributed by MNK
as a pro rata dividend to holders of MNK’s ordinary shares and, as a result, all of the shareholders of MNK became stockholders of the Company.
As we are the successor to all of Montauk USA’s interests in MEH, we present historical consolidated financial statements of Montauk USA.
In connection with the above transactions (the “Reorganization Transactions”) and the IPO, the existing shareholders of MNK became stockholders of Montauk. Following the Reorganization Transactions and the closing of the IPO, MNK
has been delisted from the JSE and will be liquidated prior to January 26, 2022.
Following the IPO, the Company’s common stock
is traded on the Nasdaq Capital Market under the ticker symbol of “MNTK” and on the JSE under the ticker symbol of “MKR.”
Summary
of Risks Associated with Our Business
Our business is subject to a number of risks and uncertainties, including those highlighted in
the section titled “Risk Factors” in this Annual Report on Form 10-K. Some of these principal risks include the following and may be further exacerbated by the
COVID-19 pandemic:
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• Our revenues may be subject to the risk of fluctuations in commodity prices.
• We may face intense competition and may not be able to successfully compete.
Market Opportunity
Increasing Demand for RNG
Demand
for RNG produced from biogas is significant and growing in large part due to an increased focus by the public and governments on reducing the emission of GHG, such as methane, and increasing the energy independence of the United States. According to
the EPA, methane is a significant GHG, which accounted for roughly 9.5% of all U.S. GHG emissions from human activities in 2018 and which has a comparative impact on global warming that is about 25 times more powerful than that of carbon dioxide
(which is produced during the combustion process). Biogas processing facilities could substantially reduce methane emissions at landfills and livestock farms, which together accounted for approximately 27% of U.S. methane emissions in 2018 according
to the EPA. The development of this energy source further supports the U.S. national security objective of attaining energy independence, as evidenced by Energy Independence and Security Act (“EISA”), which aimed to increase U.S.
energy security, develop renewable energy production, and improve vehicle fuel economy.
Over the past decade, the fastest growing end
market for RNG has been the transportation sector, where RNG is used as a replacement for fossil-based fuel. This growth has been driven, in large part, by more aggressive environmental subsidies to support the production of renewable transportation
fuels. According to NGV America, a national organization dedicated to the development of a growing, profitable, and sustainable market for vehicles powered by natural gas or biomethane, from 2015 to 2020, “RNG use as a transportation
fuel...increased 291%, displacing close to 7.5 million tons of carbon dioxide equivalent.”
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Given public calls for, and U.S. federal, state and local regulatory trends and policies
aimed at, reducing GHG emissions and increasing U.S. energy independence, we expect continued regulatory support for RNG as a replacement for fossil-based fuels and therefore continued and growing demand for RNG over the next several years.
Availability of Long-Term Feedstock Supply
Biogas can be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and
injected into existing natural gas pipelines as it is fully interchangeable with natural gas. Partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the
production of electricity. Common sources of biogas include landfills, livestock farms, and WRRFs.
Landfill- and livestock-sourced biogas
represent a significant opportunity to produce RNG and Renewable Electricity, while also reducing GHG emissions. While landfill projects for RNG and Renewable Electricity have been developed over the past few decades, undeveloped landfills remain a
significant source of biogas. Moreover, as technology continues to develop and economic incentives grow, livestock farm biogas, in particular, represents a relatively untapped biogas opportunity.
While LFG has accounted for most of the growth in biogas projects to date, we believe that additional economically viable LFG project
opportunities exist. According to the EPALMOP project database, as of August 2020, there were 565 LFGprojects in operation in the United States, including 399 operating
LFG-to-electricity projects that may be converted to produce RNG, 11 construction projects, and 54 planned RNG and Renewable Electricity projects, as well as 477
additional candidate landfills. Based on EPA data, these 477 candidate landfills have the potential to collect a combined 499 million standard cubic feet of LFG per day, or the equivalent of carbon dioxide emissions from approximately 63,000
barrels of oil. Based on our industry experience and technical knowledge and analysis, after evaluating their currently available LFG collection systems and potential production capacities, we believe that approximately 25 of these sites are
potentially economically viable as projects for acquisition and growth. In the future, additional candidate landfills may become economically viable as their growth increases LFG production and requires installation of LFG collection systems.
The LFG market is heavily fragmented, which represents, in our view, a good opportunity for companies like ours to find project opportunities.
The top ten players account for approximately 53% of installed LFG capacity as of August 2020, and over 90% of developers own five or fewer projects, according to the EPA. Aside from the top five players in the industry, which includes us, no
company accounts for more than 5% of the total LFG-to-energy capacity. Within the LFG market, over three-quarters of projects are Renewable Electricity projects with
PPAs dating back as far as 1984. As these PPAs expire, these legacy facilities present an opportunity for conversion to RNG facilities, which, in certain instances, can provide better financial terms than Renewable Electricity projects. This market
fragmentation and limited expertise in RNG processing by other market participants creates significant acquisition opportunities for us.
Biogas from livestock farm waste also represents significant opportunities for RNG production that remain largely untapped. According to the
U.S. Department of Agriculture, as of June 2018, biogas recovery systems are feasible, notwithstanding economic viability considerations, at 2,704 dairy farms and 5,409 swine farms in the United States, with potential to produce roughly
172.0 million MMBtu of RNG annually, or the equivalent of the carbon dioxide emissions from 4,556 million gallons of gasoline. Although many of the EPA identified project sites are not currently economically viable because of distance from
pipelines and contaminants in the biogas, among other reasons as described above, we believe that there is potential for sustained growth in biogas conversion from waste sources given our significant experience in evaluating sites and assessing
their viability, evolving consumer preferences, regulatory conditions, ongoing waste industry trends, and project economics. Additionally, all-in prices paid for RNG from livestock farms can be significantly
higher than prices for RNG from landfills due to state-level low-carbon fuel incentives for these projects.Given our strong understanding of
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biogas processing and our market leadership in RNG, we believe that we are well-positioned to take advantage of opportunities in this emerging market.
The availability of additional waste streams, including from organic waste diversion, food waste, sludge, and wastewater, in combination with
technological advances permitting new or more economical waste processing also have the potential to support long-term feedstock supply availability and the growth of our business.
Use of Environmental Attributes to Promote RNG Growth
When used as a transportation fuel or to produce electricity, RNG can generate additional revenue streams through Environmental Attributes.
Environmental Attributes are provided for under a variety of programs, including the national RFS program and state-level RPS and LCFS.
The RFS program requires transportation fuel to contain a minimum volume of renewable fuel. To fulfill this regulatory mandate, the EPA
requires Obligated Parties to blend renewable fuel with standard fuel to meet RVOs. Obligated Parties can comply with RVOs by either blending RNG into their existing fuel supply or purchasing RINs. RINs are generated when eligible renewable fuels
are produced or imported and blended with a petroleum product for use as a transportation fuel. The RFS program has been a key driver of growth in the RNG industry since 2014 when the EPA ruled that RNG, when used as a transportation fuel, would
qualify for D3 RINs (for cellulosic biofuels), which are generally the most valuable of the four RIN categories. In 2020 and 2019, our projects generated approximately 13.5% and 15.1%, respectively, of all D3 RINs in the United States.
The monetization of RNG also benefits from low-carbon fuel initiatives at the state-level,
specifically from established programs in California and Oregon. The CA LCFS requires fuel producers and importers to reduce the CI of their products, with goals of a 10% reduction in carbon emissions from 1990 levels by 2020 and a 20% reduction by
2030. CARB awards CA LCFS credits to RNG projects based on each project’s CI score relative to the target CI score for gasoline and diesel fuels. The CI score represents the overall net impact of carbon emissions for each RNG pathway and is
determined on a project-by-project basis. Based on our expected CI scores, we anticipate that RNG produced by livestock farms can potentially earn two to three times the
amount of revenue per MMBtu relative to RNG produced from LFG projects. Several other statesare considering LCFS initiatives similar to those implemented in California and Oregon.
Additionally, biogas is considered to be a renewable resource in all 37 states that encourage or mandate the use of renewable energy. Thirty
states, the District of Columbia, and Puerto Rico have RPS that require utilities to supply a percentage of power from renewable resources, and seven states have a Renewable Portfolio Goal that is similar to RPS, but is not a requirement. Many
states allow utilities to comply with RPS through tradable RECs, which provide an additional revenue stream to RNG projects that produce electricity from biogas.
Our Strengths
Management and Project Expertise
Our management team has decades of combined experience in the development, design, construction and operation of biogas facilities
that produce RNG and Renewable Electricity. We believe that our team’s proven track record and focus on development of RNG projects gives us a strategic advantage in continuing to grow our business profitably. Our diverse experience and
integration of key technical, environmental, and administrative support functions support our ability to design and operate projects with sustained and predictable cash flows.
Our experience and extensive project portfolio has given us access to the full spectrum of available biogas-to-RNG and biogas-to-Renewable Electricity conversion technologies. We are technology agnostic and base project design on
the available technologies (and related equipment) most suitable for the specific
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application, including membranes, media, and solvent-based gas cleanup technologies. We are actively engaged in the management of each project site and regularly serve in engineering,
construction management, and commissioning roles. This allows us to develop a comprehensive understanding of the operational performance of each technology and how to optimize application of the technology to specific projects, including through
enhancements and improvements of operating or abandoned projects. We also work with key vendors on initiatives to develop and test upgrades to existing technologies.
We continually seek to optimize the highest-value use of our existing assets. Because our equipment is modular, it can be disassembled
and redeployed from one site to another at a lower cost than new greenfield development. For example, when equipment capacity at an existing project is larger than needed and can be repurposed for newer sites with larger production and growth
potential where that capacity can be more fully utilized. This can occur at older landfill sites that have limited or no acceptance of waste intake or at sites where fuel supply agreements have expired, but where the equipment still has
sufficient remaining useful life.
Access to Development Opportunities
We have strong relationships throughout the industry supply chain from technology and equipment providers to feedstock owners, and RNG off-takers. We believe that the trust and strong reputation we have attained in combination with our understanding of the various and complex Environmental Attributes gives us a competitive advantage relative to new
market entrants.
We leverage our relationships built over the past several decades to identify and execute new project opportunities.
Typically, new development opportunities come from our existing relationships with landfill owners who value our long operating history and strong reputation in the industry. This includes new projects with or referrals from existing
partners. These relationships include Waste Management and Republic Services, the two largest waste management companies in the United States, which operate ten of our 14 landfill sites. We are the leading third-party developer for Waste
Management and operate projects on both private and publicly owned landfills. We actively seek to extend the term of our contracts at our project sites and view our positive relationships with the owners and managers of our host landfills as a
contributing factor to our ability to extend contract terms as they come due. Additionally, as one of the largest producers of RNG from LFG, we also frequently receive RFPs from landfill owners for new biogas facilities at their landfills.
Finally, our prominence in the industry often makes us a preferred suitor for owners seeking to sell existing projects. Acquisition
opportunities often come to our attention by direct communications with industry participants as well as firms marketing portfolios of project.
Large and Diverse Project Portfolio
We believe that we have one of the largest and most technologically diverse project portfolios in the RNG industry. Our ability to solve unique
project development challenges and integrate such solutions across our entire project portfolio has supported the long-term successful partnerships we have with our landfill hosts. Because we are able to meet the varying needs of our host partners,
we have a strong reputation and are actively sought out for new project and acquisition opportunities. Additionally, our size and financial discipline generally affords us the ability to achieve priority service and pricing from contractors, service
providers, and equipment suppliers.
Environmental, Health and Safety and Compliance Leadership
Our executive team places the highest priority on the health and safety of our staff and third parties at our sites, as well as the
preservation of the environment. Our corporate culture is built around supporting these priorities, as reflected in our well-established practices and policies. By setting and maintaining high standards in the renewable energy field, we are often
able to contribute positively to the safety practices and policies of our
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host landfills, which reflects favorably on us with potential hosts when choosing a counterparty. Our high safety standards include use of wireless gas monitoring safety devices, active
monitoring of all field workers, performing periodic EHS audits and using technology throughout our safety processes from employee training in compliance with operational processes and procedures to emergency preparedness. By extension, we
incorporate our EHS standards into our subcontractor selection qualifications to ensure that our commitment to high EHS standards is shared by our subcontractors which provides further assurances to our host landfills. As of December 31, 2020,
excluding two incidents related to COVID-19, our year-to-date TRIR was 0.865 which is lower than the 2019 national average of
1.20 TRIR for the mining, quarrying and oil and gas extraction industries and the 2019 national average of 3.00 TRIR for all industries. As of December 31, 2020, we have not received any U.S. OSHA or state OSHA citations in the last five years.
Our EHS programs include partnering with Blackline Safety to provide each of our site employees with a four-gas monitoring device with work-anywhere wireless capabilities; emergency response protocols for all
locations which include facility and landfill access, gate access, and site specific alerts to account for employee safety at all points throughout the workday; a learning management system that combines traditional online safety training and instructor-led training; and monthly evaluations for training compliance at each operations facility.
Our Strategy
We aim to maintain and grow our position as a leading producer of RNG in the United States. We support this objective through a
multi-pronged strategy of:
• expanding our capabilities to new feedstock sources and technologies.
Promoting the Reduction of Methane Emissions and Expanding the Use of Renewable Fuels to Displace Fossil-Based Fuels
We share the renewable fuel industry’s commitment to providing sustainable renewable energy solutions and to offering products with high
economic and ecological value. By simultaneously replacing fossil-based fuels and reducing overall methane emissions, our projects have a substantial positive environmental impact. We are committed to capturing as much biogas from our host landfills
as possible for conversion to RNG. As a leading producer of RNG, we believe it is imperative to our continued growth and success that we remain strong advocates for the sustainable development, deployment and utilization of RNG to reduce our
dependence on fossil fuels while increasing our domestic energy production.
Many of our team members have been involved in the renewable
fuel industry for over 30 years. We are a founding member and active participant in the RNGC. The RNGC was formed to provide an educational platform and to be an advocate for the protection, preservation and promotion of the RNG industry in North
America. The RNGC’s diverse membership includes each sector of the RNG industry, such as waste collection and management companies, renewable energy developers, engineers, bankers, financiers, investors, marketers, transporters, manufacturers,
and technology and service providers. Our participation allows us to align with industry colleagues to better understand the challenges facing the industry and to collaborate with them to develop creative solutions to such problems.
As a founding member of the RNGC and participant in several RNGC technical committees, we regularly participate in conferences and regulatory
initiatives, including lobbying, to address key issues and promote the RNG industry. Collaborating with the diverse RNGC membership provides us with a holistic view of the RNG
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industry, which aides us in identifying emerging trends and opportunities. Our participation allows us to align with industry colleagues to better understand the challenges facing the industry
and to collaborate with them to develop creative solutions to such problems. A primary function of the RNGC is to educate those in the natural gas industry, including pipeline owners, who are not familiar with RNG and its fungibility with
traditional pipeline natural gas. We are focused on maintaining and nurturing our relationships with pipeline off-takers and seek to ensure that such relationships are a priority, including by maintaining
continuous communication, enforcing stringent real-time monitoring of our product quality, and providing marketing material to assist with their corporate sustainability messaging.
Expanding Our Existing Project Portfolio and Developing New Development Opportunities
We exercise financial discipline in pursuing projects by targeting project returns that are in line with the relative risk of the specific
projects and associated feedstock costs, offtake contracts and any other related attributes that can be monetized. We are currently evaluating three project expansion opportunities at existing project sites and one new
electricity-to-RNG conversion project. We regularly analyze several potential new projects that are at various stages of negotiation and review. The potential projects
typically include a mix of new project sites, project conversions and strategic acquisitions. Currently, no new potential projects are subject to definitive agreements and each potential opportunity is subject to competitive market conditions.
Montauk Growth Channels
Expanding Operations at Existing Project Sites. We monitor biogas supply availability across our
portfolio and seek to maximize production at existing projects by expanding operations when economically feasible. Most of our landfill locations continue to accept waste deliveries and the available LFG at these sites is expected to increase over
time, which we expect to support expanded production. This has allowed us to maintain average production availability of approximately 76% at our RNG projects and 92% at our electricity projects, weighted by 2020 expected production, excluding
projects that commenced operation in 2020. Additionally, we are evaluating opportunities to utilize excess gas for RNG production at some of our electricity projects. Most recently, we increased the gas production at our McCarty project by 7%
through an expansion project completed in January 2018, as described below.
We treat our existing assets as an integrated portfolio
rather than a collection of individual projects. This allows us to utilize any new business practices across our entire project portfolio quickly, including advances with respect to troubleshooting, optimization, cost savings, and host site
interaction. For example, we recently
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were able to take advantage of findings from a root cause failure analysis on a particular piece of equipment at a single project site to improve maintenance on similar equipment throughout our
portfolio. We frequently identify services that result in a positive reaction from our project partners and then communicate that to other project managers so that they can incorporate such services into their project sites. Our integrated, pro-active and value-add approach helps us maintain strong relationships with our partners, which can often lead to term extensions and new opportunities.
We also experience organic growth in production at our existing projects because of increases in biogas supply at our projects and continued
operation optimization. We size our projects to account for this increase in the biogas supply curve over time. For example, at many of our newer projects, such as Apex and Galveston, we expect gradual increases in production as those
landfill sites continue to grow. Additionally, many of our expansion efforts to date, such as those at McCarty and Rumpke, have helped to optimize our project capacity to take advantage of excess biogas at older landfills that are still open
and growing. Not only have these projects achieved an initial increase in production following the expansion project, but we also expect to see continued gradual increases over time.
Case Study of an Expansion Project: McCarty Landfill: The McCarty landfill is owned and operated by Republic Services and is one of the
largest waste disposal facilities in Texas. Our RNG project at this landfill was originally constructed as a 3,892 MMBtu/day facility that achieved commercial operations in 1986. In January 2018, we undertook and completed an expansion
of the project to increase RNG production by 7%, to a design capacity of 4,415 MMBtu at a cost of $2.1 million. The expansion effort added blower capacity, which increased the inlet pressure to the main compressors leading to higher
production. The increased output from the project did not require amendments to our existing fuel supply and off-take agreements. Prior to commissioning the expansion, we applied for and obtained the
necessary permits and other approvals to expand the project and the interconnects that we relied upon at this project. Engineering and design activities began in February 2017, with construction beginning in August 2017 and commissioning in
November 2017.
Expanding through Acquisition. The RNG industry is highly fragmented with approximately 90% of operating projects
owned by companies that own five or fewer projects. We believe that these small project portfolios present opportunity for industry consolidation. We are well-positioned to take advantage of this consolidation opportunity because of our scale,
operational and managerial capabilities, and execution track record in integrating acquisitions. Over the last ten years, we have acquired 11 projects and members of our current management team have led all of those acquisitions. We expect that as
we continue to scale up our business, our increased size, industry position and access to capital will provide us with increased acquisition opportunities.
Converting Existing Electricity Projects to RNG. We periodically evaluate opportunities to convert existing projects from electricity
generation to RNG production. These opportunities tend to be attractive for our merchant electricity projects given the favorable economics for RNG plus RIN sales relative to merchant electricity rates plus REC sales. This strategy has
been an increasingly attractive avenue for growth since 2014 when RNG from landfills became eligible for D3 RINs. Historically, we have taken advantage of these opportunities on a gradual basis as PPAs for our electricity projects have
expired. To date, we have converted two projects from LFG-to-electricity to LFG-to-RNG
and one project from ADG-to-electricity to ADG-to-RNG, and we are currently evaluating a
fourth conversion opportunity for LFG-to-RNG.
Looking
forward, several of our development and pipeline projects may convert existing electricity projects to RNG. For example, the existing generation facilities at the Coastal Plains project, which currently sells merchant power and RECs into the
Electric Reliability Council of Texas market, was shut down in May 2019 and was converted to an RNG production facility with commercial operations that commenced in September 2020.
Case Study of a Conversion Project: Atascocita Landfill: We acquired the Atascocita project, an LFG-to-electricity project located in Humble, Texas, from Viridis Energy (Texas), LP in 2011. The Atascocita
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landfill is owned and operated by Waste Management. Electricity produced by the facility was sold on a merchant basis into the Electric Reliability Council of Texas market.
Recognizing an opportunity to realize returns on favorable pricing for RNG and RIN attributes, we approached Waste Management about converting the project to RNG in 2016. We signed an updated gas supply agreement with Waste Management in October
2016, which included a royalty based on the monetization of Environmental Attributes, including RINs and LCFS credits. Construction was managed in-house and completed over 19 months after the gas supply
agreement was signed, with the project achieving commercial operations in May 2018, making it one of the largest plants constructed for processing RNG. All of these aspects required unique design and implementation along with cooperation from
Waste Management in order to meet regulatory requirements.
New equipment installed includes membrane separation, nitrogen removal,
deoxygenation, and H2S removal technologies. The repurposed facility has a design capacity of 5,570 MMBtu/day. Known vendors and suppliers were used to procure the majority of equipment and systems. As such, timely ordering and
delivery of equipment was achieved relative to the construction schedule. The total capital expenditures to convert Atascocita were approximately $40 million. The project has a remaining fuel supply contract with Waste Management for 20
years from commercial operation.
Leveraging and Creating Long-Term Relationships. Dependable and economic sources of renewable
methane are critical to our success. Our projects provide our landfill and livestock farm partners with a variety of benefits, including a means to monetize biogas from their sites and support their regulatory compliance. By addressing the
management of byproducts of our project hosts’ primary businesses, our services allow landfill owners and operators and livestock farms to increase their permitted landfill space and livestock count, respectively. These services facilitate
long-term relationships with project hosts that may serve as a source for future projects and relationships.
Expanding Our Industry Position as a
Full-Service Partner for Development Opportunities, Including Through Strategic Transactions
Over our three decades of experience,
we have developed the full range of RNG project related capabilities from engineering, construction, management and operations, through EHS oversight and Environmental Attributes management. By vertically integrating across RNG services, we are able
to reduce development and operations costs, optimize efficiencies and improve operations. Our full suite of capabilities allows us to serve a multi-project partner for certain project hosts across multiple transactions, including through strategic
transactions. To that end, we actively identify and evaluate opportunities to acquire entities that will further our vertically-integrated services.
Expanding Our Capabilities to New Feedstock Sources and Technologies
We intend to diversify our project portfolio beyond landfill biogas through expansion into additional methane producing assets, while
opportunistically adding third-party developed technology capabilities to boost financial performance and our overall cost competitiveness. We are commercially operating our first livestock waste project (dairy), actively pursuing new fuel supply
opportunities in WRRFs, and looking at long-term organic waste and sludge opportunities. The drive toward voluntary and most likely regulatory-required organic waste diversion from landfills is of particular interest as we leverage our current
experience base, and we believe this trend will provide long-term growth opportunities.
We believe that the market has not yet unlocked
the full potential of RNG and Renewable Electricity. We do not own any material registered intellectual property. However, as biogas processing technology continues to improve and the required energy intensity of the RNG and Renewable Electricity
production process is reduced, we expect that we will be able to enter new markets for our products, such as providing fuel for the production of energy sources. With our experience and industry expertise, we are well-positioned to take advantage of
opportunities to meet the clean energy needs of other industries looking to use renewable energy in their operations.
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Products Sold
The revenues received from selling renewable energy consist of two main components. The first component is revenues from the commodity value of
the natural gas or electricity generated. The second component is from the Environmental Attributes derived from the production of RNG and Renewable Electricity. For RNG, Environmental Attribute revenues are substantially generated from RINs when
used as a transportation fuel. In addition, RNG can generate an additional revenue stream when used as a transportation fuel in states that have adopted low-carbon fuel incentive programs. The primary
Environmental Attributes derived from the production of electricity from renewable resources are RECs, which translate into additional revenues for units of Renewable Electricity produced.
RNG
LFG and gas from livestock
digesters can be processed into pipeline-quality RNG by removing the majority of the non-methane components including carbon dioxide, water, sulfur, nitrogen, and other trace compounds. RNG can be used for
transportation fuel when compressed (CNG) or liquefied (LNG) and virtually all of the RNG we produce is used in this manner.
RNG, like
traditional natural gas, is traded nationally. Once in an interstate pipeline, RNG can be transported to vehicle fueling stations to be used as a transportation fuel, to utilities to generate power, or for use in generating fuel cell energy anywhere
within the North American pipeline system. This flexibility enables us to capture value from the renewable attributes of biogas by delivering RNG to markets and customers that place a premium on renewable energy.
RNG is priced in line with the wholesale natural gas market, based on Henry Hub pricing, with regional variation according to demand and
supply issues. We sell the RNG produced from our projects under a variety of short-term and medium-term agreements to counterparties, with tenures varying from three years to five years. Our contracts with counterparties are typically structured to
be based on varying natural gas price indices for the RNG produced. We also share a portion of our Environmental Attributes with our off-take counterparties as consideration for the counterparty using our RNG
as a transportation fuel.
D3 RINs
RNG has the same chemical composition as natural gas from fossil sources, but has unique Environmental Attributes assigned to it due to its
origin from organic sources. These attributes qualify RNG as a renewable fuel under the federal RFS program, established pursuant to the EPACT 2005 and EISA, allowing RNG to generate renewable fuel credits called RINs when the RNG is used as a
transportation fuel.
RINs are saleable regulatory credits that represent a quantity of qualifying fuel and are used by refiners and
importers to evidence compliance with their RFS obligations. Given that the RFS is a national program, the price of a RIN is the same anywhere in the United States. The RFS program originally contemplated 1.75 billion gallons of fuel from
cellulosic biofuels by 2014, the use of which would be tracked through D3 RINs. However, cellulosic biofuel production grew slower than expected, with 2013 output at only 281,819 gallons (422,740 RINs). This prompted the EPA to expand the definition
of biofuels that could qualify for D3 RINs in July 2014, to include fuels from cellulosic biogas, including biogas from landfills, livestock farms, and WRRFs. This significantly increased the quantity of D3 RINs produced, with production increasing
to approximately 33 million net RINs in 2014 and 505 million net RINs in 2021. In addition, given the historic shortage in supply of D3 RINs to meet blending requirements, the EPA allows obligated refiners to satisfy RFS compliance
obligations for D3 RINs by either purchasing CWC plus D5 RINs or by purchasing D3 RINs. CWC prices are set annually as the greater of (i) $0.25 or (ii) $3.00 (as adjusted by Consumer Price Index) less the average wholesale price of gasoline for the
most recent 12-month period of data available as of September 30th prior to the calendar year in question. CWC prices are typically published by the EPA each November, with an announced CWC price for 2020 of
$1.80. The value of a D3 RIN is therefore a derivative of the market price for D5 RINs and CWCs, which in turn are inversely linked to the wholesale price of gasoline.
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We have been active in the RFS program since 2014 and expect to remain a significant
contributor to the overall generation of RINs from RNG. We monetize our portion of the RINs, directly, at auction or through third-party agents or marketers.
CA LCFS
CALCFS
credits are environmental credits generated in California in order to stimulate the use of cleaner, low-carbon fuels. This program encourages the production of
low-carbon fuels by setting annual CI standards, which are intended to reduce GHG emissions from the state’s transportation sector. One of the key aspects of the program is that it encourages the use of low-carbon transportation fuel, such as CNG, in vehicles instead of gasoline. This program further encourages use of renewable fuels in vehicles over CNG from fossil fuels.
The value of an CA LCFS credit varies according to the CI value of the fuel source as determined by CARB. Fuels that have a lower CI score
benefit from a higher CA LCFS credit. RNG from LFG and livestock digester biogas that are used as a transport fuel both qualify for CA LCFS credits. The number of CA LCFS credits for RNG from livestock digesters is significantly higher than the
number of CA LCFS credits for RNG from landfills, due to the relative CI scores of the two fuels. Fuel that is eligible for RINs can also receive CA LCFS credits. As a result, CA LCFS credits represent a revenue stream incremental to the value RNG
producers receive for RINs. For livestock digester RNG projects, CA LCFS credits are a substantial revenue driver. We currently earn CA LCFS credits on seven of our projects, and we expect the revenue generated by CA LCFS credits to increase as we
continue to develop and bring additional livestock digester projects online over the next few years.
Several states in the United States
also have or are considering adopting this model. Oregon’s Clean Fuels Program, enacted in 2009 and implemented in 2016, operates using a credit system similar to the CA LCFS program. Similar to RINs, LCFS credits can be sold separately from
the RNG fuel sold, allowing us to monetize LCFS credits for fuel produced and purchased outside of states that have LCFS programs.
Renewable
Electricity
Electricity is a commodity that trades and is priced on a regional basis in and among regional control areas. Pricing
for commodity-sold electricity can be based on day-ahead prices for scheduled deliveries or hourly, real-time prices for unscheduled deliveries. Prices vary across the country based on weather, load patterns
and local power and transmission restrictions. The Renewable Electricity produced at our biogas-to-electricity projects is sold under long-term contracts to
credit-worthy counterparties, typically under a fixed price with escalators. The terms of these contracts range from 5 to 22 years, with a weighted average remaining tenure of 14 years, based on 2021 expected electricity production.
RECs
Biogas is considered to be a
renewable resource in all 37 states that encourage or mandate the use of renewable energy. Thirty states, the District of Columbia, and Puerto Rico have RPS that require utilities to supply a percentage of power from renewable resources, and seven
states have a Renewable Portfolio Goal that is similar to RPS, but is an objective or goal and not a requirement. Many states allow utilities to comply with RPS through tradable RECs, which provide an additional revenue stream to RNG projects that
produce electricity from biogas.
The value of a REC is dependent on each state’s renewable energy requirements as mandated by its
RPS. REC values are higher in states which require a percentage of total electricity to come from renewable resources. In states with no renewable energy requirements, RECs can have no value at all. In some markets, we have entered into PPAs under
which we sell RECs and other renewable attributes bundled with the power being sold at
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a combined price. This occurs where the utility off-take counterparty offers a combined rate for the renewable energy it needs to satisfy RPS or other
business requirements that is the best combined price for one of our projects.
Our Projects
We currently own and operate 15 projects, 12 of which are RNG projects and three of which are Renewable Electricity projects. Of our three
Renewable Electricity projects we currently operate, we expect to convert one of them to produce RNG. In addition to the electricity-to-RNG conversion project, we are
currently in the process of developing one additional RNG project from LFG. We are also working on other projects which will repurpose equipment from existing biogas facilities for use at new project sites.
Renewable Electricity Generation
Site COD (1) Capacity (MW) Source
Bowerman Irvine, CA 2016 23.6 Landfill
Security Houston, TX 2003 3.4 Landfill
AEL Sand Spring, OK 2013 3.2 Landfill
Total Capacity (MW) 30.2
Renewable Natural Gas
Site COD(1) Capacity (MMBtu/day)(2) Source
Rumpke Cincinnati, OH 1986 7,271 Landfill
Monroeville Monroeville, PA 2004 2,372 Landfill
ValleyHarrison City, PA 2004 2,372 Landfill
GalvestonGalveston, TX 2019 1,857 Landfill
Coastal PlainsAlvin, TX 2020 1,775 Landfill
Southern Davidsville, PA 2007 928 Landfill
Pico (4)Jerome, ID 2020 903 Livestock (Dairy)
Total Capacity (MMBtu/day) 33,850
= Renewable Natural Gas Project
= Renewable Electricity Project
(1) “COD” refers to the commercial operation date of each site.
We have a long history of operating our projects
with partners, with our oldest relationship going back 46 years. On average, we have had an 18-year history with our current project site owners. Our operating RNG
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projects have an average expected remaining useful life of approximately 19 years, as weighted by 2021 expiration. Our operating electricity projects have an average expected remaining useful
life of approximately 14 years, as weighted by 2021 expected expiration.
Approximately 93% of our 2020 RNG production has been
monetized under fuel supply agreements with expiration dates more than 15 years from December 31, 2020. Additionally, approximately 96% of our 2020 Renewable Electricity production has been monetized under fuel supply agreements with expiration
dates more than 15 years from December 31, 2020. Concurrent with our fuel supply agreements, we typically enter into property leases with our project hosts, which govern access rights, permitted activities, easements and other property rights.
We own all equipment and facilities on each leased property, other than equipment provided by utility companies providing services on-site. Lease termination typically requires the restoration of the leased
area to its original condition. We have successfully ended leases on four facilities and are currently restoring a fifth facility.
Once
collected, biogas can be processed into pipeline-quality RNG or converted into electricity. The conversion facility is typically located on landfill property away from the active fill operations where additional waste is added to the landfill site.
An RNG project involves the conversion of raw LFG into pipeline quality gas for introduction to a natural gas transmission or
distribution line. An RNG plant processes the gas by removing the majority of the non-methane components including carbon dioxide, water, and other volatile and
non-volatile organic compounds to attain pipeline quality gas. This complex process has numerous variables that need to be managed in order to be cost-effective and efficient. At the end of the gas processing
chain, RNG is typically compressed and then sold into a natural gas pipeline or to a dedicated end user. These sales occur at market prices for the energy and the value of the Environmental Attributes derived from the use of the RNG as a
transportation fuel.
Our projects currently utilize threeof the four proven commercial technologies available to process raw
biogas into RNG, including: pressure swing absorption (“PSA”), Membrane Filtration and solvent scrubbing. We also have historically used the other proven technology, refrigerated physical absorption, commonly referred to as Kryosol;
however, it is not in use at any of our existing operating projects. All four of these technologies have similar features, but are distinguished primarily by the means employed to separate carbon dioxide from methane in biogas. We are capable of
working with virtually all available biogas processing technologies at our sites. We attend industry conferences and maintain an ongoing dialogue with key equipment providers to ensure we stay informed of the latest technology that could be deployed
at our current and future facilities.
Electricity is generated using gas-fueled engines or
turbine-driven electrical generators, which are designed to operate efficiently on medium-Btu gas. As such, electricity generation typically involves producing
medium-Btu gas, which is then pumped into a generating facility. The electricity is metered and sold under long-term contracts to utilities and municipalities or at spot prices.
Stated capacity reflects the design capacity of each facility. Several of our projects have reserve capacity when comparing design capacity to
available biogas feedstock. Several previous acquisitions are gas limited and operate in this fashion. Our larger projects are at or near design capacity and either have expansions planned or are being evaluated for future expansions dependent on
the availability of excess biogas feedstock.
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RNG Projects
We currently own and operate 12 RNG projects in Ohio (two), Pennsylvania (five), Texas (four) and Idaho (one) which, in the aggregate, have a
total design capacity of approximately 33,850 MMBtu/day, which equates to 624,000 tons of carbon dioxide emission reduction annually over using fossil fuels, or the equivalent of the carbon dioxide emissions from consuming approximately 1,940,000
gallons of gasoline per day.
RNG Projects
Site Location Capacity*
Rumpke Cincinnati, OH 7,271 MMBtu/day
Atascocita Humble, TX 5,570 MMBtu/day
McCarty Houston, TX 4,415 MMBtu/day
Apex Amsterdam, OH 2,673 MMBtu/day
Monroeville Monroeville, PA 2,372 MMBtu/day
Valley Harrison City, PA 2,372 MMBtu/day
Galveston Galveston, TX 1,857 MMBtu/day
Raeger Mountain Johnstown, PA 1,857 MMBtu/day
Shade Cairnbrook, PA 1,857 MMBtu/day
Coastal Plains Alvin, TX 1,775 MMBtu/day
Southern Davidsville, PA 928 MMBtu/day
Pico Jerome, ID 903 MMBtu/day
Typically, a
biogas-to-RNG facility includes three phases: biogas collection, primary processing and additional processing.
At landfills, biogas collection systems can be configured as vertical wells or horizontal trenches. The most common method is drilling
vertical wells into the waste mass and connecting the wellheads to lateral piping that transports the gas to a collection header using a blower or vacuum induction system. Horizontal trench systems are useful in areas of landfills that continue to
have active filling. Some landfills use a combination of vertical wells and horizontal collectors. Collection system operators “tune” or adjust the wellfield to maximize the volume and quality of biogas collected while maintaining
environmental compliance.
A basic biogas processing plant includes a knock-out drum to remove
moisture, blowers to provide a vacuum to “pull” the gas and pressure to convey the gas, and a flare. System operators monitor parameters to maximize system efficiency. Using biogas in an energy recovery system usually requires some
treatment of the gas to remove excess moisture, particulates, and other impurities. The type and extent of treatment depends on site-specific biogas characteristics and the type of energy recovery system. Treatment of the gas typically includes the
removal of hydrogen sulfide (H2S), moisture and contaminants within the gas, and then separation of the carbon dioxide (CO2) from the methane (CH4). Further treatment of the biogas is often required to remove residual nitrogen and/or oxygen to meet
pipeline specifications. Some end uses, such as pipeline injection or vehicle fuel projects, require additional cleaning and compression of the biogas.
Illustrative Projects
Rumpke. The
Rumpke landfill, located in Cincinnati, Ohio, is an open landfill with significant filling capacity available. The landfill, which is our largest site by capacity, currently holds approximately 62 million tons of waste, receives over 10,000
tons of waste per day and is expected to operate through 2052 under its
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current permits. The landfill has filed for a new MSW permit to expand its footprint. The MSW permit includes a Land-GEM model that anticipates the
landfill accepting waste through 2085.
At this site, we own and operate a 15 million standard cubic feet per day
(“SCFD”) RNG processing facility using PSA technology. The facility consists of one, six million SCFD plant that was placed into service in 1985, one, five million SCFD plant that was placed into service in 2007 and one, three
million SCFD plant that was placed into service in 1994. Pursuant to a fuel supply agreement with the owner of the landfill, we have fuel for this project through December 31, 2037. We are responsible for operation, maintenance and costs of
this site’s biogas collection system.
The Rumpke project is registered with the EPA as a qualified facility for the generation of
RINs under the RFS program and with CARB as a qualified facility for the generation of CA LCFS credits for fuel generated for use as a transportation fuel. We currently sell the RNG and Environmental Attributes produced at this facility at a fixed
price. The fixed price is supplemented by sharing of incremental revenues from monetization of the Environmental Attributes under a margin sharing agreement.
Atascocita. The Atascocita landfill, located in Humble, Texas, is an open landfill with approximately 25.3 million tons of
capacity available. The landfill currently holds approximately 36.4 million tons of waste, receives over 3,600 tons of waste per day and is expected to operate through 2045 under its current permits.
At this site, we shut down a merchant electricity project that was only able to process a portion of the gas the site was producing and
repurposed it to an RNG project where we own and operate a 10.8 million SCFD RNG processing facility using membrane separation technology. The project was placed into service in May 2018. The plant is equipped with membrane
separation, nitrogen removal, deoxygenation, and H2S removal technologies. Pursuant to a fuel supply agreement, we have fuel supply for this project through May 1, 2038. We are responsible for the operation, management and capital costs of the
processing facility.
The Atascocita project is registered with the EPA as a qualified facility for the generation of RINs under the RFS
program and for fuel generated for use as a transportation fuel. We currently sell the RNG produced at this facility at market prices under contract through 2023, and separately sell the RINs produced to Obligated Parties on either a spot or forward
basis based on current calendar year.
McCarty. The McCarty landfill, located in Houston, Texas, is an open landfill that holds
approximately 62.4 million tons of waste, receives approximately 4,573 tons per day, has been in operation since 1967 and is expected to operate through 2024 under its current permits.
At this site, we own and operate a nine million SCFD RNG gas processing facility that employs Selexol, a solvent scrubbing based gas separator
technique.
Pursuant to a fuel supply agreement, we have fuel supply for this project through December 31, 2036, and we are
responsible for the operation, management and capital costs of the LFG collection system.
The McCarty project is registered with the EPA
as a qualified facility for the generation of RINs under the RFS program and with CARB as a qualified facility for the generation of CA LCFS credits. We currently sell the RNG produced at this facility at market prices under a contract extending
through January 31, 2024, and separately sell the RINs produced to Obligated Parties on either a spot or forward basis based on current calendar year.
Renewable Electricity Projects
We
currently own and operate the following three Renewable Electricity projects in California, Oklahoma, and Texas which, in the aggregate, have a total design capacity of approximately 30.2 MW, which equates to
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175,600 tons of carbon dioxide emission annually over using fossil fuels, or the equivalent ofthe carbon dioxide emissions from consuming approximately 469,000 gallons of gasoline per
day. During 2020, our Renewable Electricity projects collectively produced 0.2 MWh. Our Renewable Electricity projects utilize reciprocating engine generator sets to generate electricity at landfills.
Renewable Electricity Projects
Site Location Capacity(1)
Bowerman Power Irvine, CA 23.6 MW
Security Cleveland, TX 3.4 MW