WTI (Apr) $67.04 +68c, Brent (May) $70.36 +90c, Diff -$3.32 +22c
USNG (Apr) $4.40 +10c, UKNG (Apr) 94.66p +3.82p, TTF (Apr) €39.7 +€1.95

Oil price

Oil is down around 50 cents today and remains listless, Chinese inflation data was poor and Opec is inconclusive with Russia saying that after April the group ‘might take further action to support prices’.

Diversified Energy Company

Diversified Energy, FuelCell Energy, and TESIAC have announced a strategic partnership intended to address the urgent energy needs of data centers by supplying as much as 360 megawatts of electricity to three distinct locations in Virginia, West Virginia and Kentucky.

The partnership has agreed to create an Acquisition and Development Company (“ADC”) focused on delivering reliable, cost efficient, net-zero power from natural gas and captured coal mine methane (“CMM”) to meet the soaring demand of data centers for reliable power.

The collaboration among the three companies would leverage in-basin natural gas production, advanced energy generation via fuel cell technology, and infrastructure financing to create a highly efficient, scalable, and sustainable energy solution tailored for the rapid expansion of data center power capacity requirements.

Natural gas or CMM, extracted from coal mines by Diversified Energy and delivered via pipeline to fuel cells, would generate power through the electrochemical conversion of methane to hydrogen, and then to electricity. This combustion-free process is virtually free of air pollution emissions, speeding air permitting and enabling the system to be brought online faster than combustion-based systems. Heat that is co-generated by the fuel cells can be harnessed and converted to chilling for the data center, thus increasing overall system efficiency and further enhancing economic value.  Importantly, this process qualifies for established environmental and tax credits that have the potential to provide meaningful cash flow in addition to the economic benefits of gas and power sales.

The parties are structuring the terms of the agreement to include:

• Diversified Energy   supplying natural gas and CMM or captured waste methane from coal mines that otherwise would have been vented into the atmosphere, from its Appalachian Basin production as the base fuel.
• FuelCell Energy deploying its fuel cell energy platforms, delivering distributed, high-efficiency baseload power generation, emissions management, and thermal energy solutions. This includes electricity and waste heat driven absorption chilling, ensuring data centers achieve unmatched efficiency, carbon reduction, and resilience.
• TESIAC leveraging its investment and development expertise, securing highly competitive financing options to accelerate deployment while maintaining long-term profitability and scalability.

This unique partnership intends to create a decentralized, high-performance, and sustainable energy solution to meet the demands of data centers that enable rapidly growing AI and high-performance graphics processing units. The partnership initiative, using U.S.-made technology and materials, could create hundreds of well-paying jobs in construction, operation, maintenance, and assembly and engineering, as well as indirect economic benefits, all while driving a new era of innovation in the data center industry, alongside other high-volume electric off-take markets.

Other key attributes include:

• Behind-the-Meter Solutions: Rather than rely on grid-based power, this model is expected to be designed to provide on-site, continuous, and scalable power generation, securing data center uptime even in volatile market conditions with optionality to sell into the grid.
• Disruptive Financing Model: Innovative capital structuring will target faster deployment and stronger financial resilience compared to traditional investment structures.
• Carbon-Optimized Power Generation: The integration of captured methane, distributed fuel cells and emissions capture ready technology to reduce a customer’ s carbon footprint, setting a new industry standard.

Brad Gray, President and Chief Financial Officer of Diversified Energy, said:
“Our natural gas and coal mine methane asset footprint is advantageously positioned in the Appalachian Region to support the power generation needs of data centers directly. The market demand for the type of reliable, quickly dispatchable power that only natural gas can deliver is incredibly strong, and we’re excited about the potential of this partnership to deploy Diversified Energy-produced natural gas and coal mine methane (CMM) and pair it with Fuel Cell’s advanced industrial-scale technology to create an efficient, cost-effective, environmentally sound solution for the next generation power needs of data centers.”

Jason Few, President and CEO of FuelCell Energy, stated:
“We’re excited by the opportunity to partner with the Diversified Energy and TESIAC teams, merging their resources with our electrochemical technology to deliver a scalable, distributed baseload power solution. We believe the future of AI and other high-performance computing will require an abundant supply of clean, reliable, and locally generated power, ensuring that data centers can operate with maximum efficiency and sustainability. By leveraging an abundant supply of natural gas and coal mine methane (CMM), we’re confident we can address data center energy needs more quickly and cleanly than other market alternatives, accelerating the time to revenue for data centers and their customers.”

Karen Morgan, Managing Partner at TESIAC, said:
“We anticipate there will be multiple benefits for communities from this collaboration. Stabilizing the energy supply, while capturing methane emissions, turns an environmental challenge into an economic growth opportunity, creating steady job growth as a result of bringing the supply chain closer to the source of power and the end user. By combining our expertise with Diversified Energy and FuelCell Energy, we are creating a model for the future of data centers, one that is strategic, sustainable and built for long-term growth.”

This looks like a very smart move for DEC who are incredibly well placed to service this market which can only grow, and grow very fast in coming years. Not for them any problem with supply of natural gas or coal mine methane and combined with the fuel cell expertise and the financing and development capabilities at Tesiac and the JV looks likely to attract tax breaks in place to attract net-zero investment. 

The size requirements of data centers is well known and in recent times investment cases are being put to the fuel industry by the AI industry and only fossil fuels and nuclear are likely to be able to deliver such complexity and sheer size needed. 

We are a bit short on detail here but I am not worried about that, this group of companies can provide expertise in the key areas of development, financing and raw materials to be in the box seats as the power supply for data centres.

Savannah Energy

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce, further to its announcement of 19 March 2024, that it has completed its acquisition of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (“SIPEC”) (the “SIPEC Acquisition”). SIPEC’s principal asset is the 49% non-operated interest in the Stubb Creek oil & gas field (“Stubb Creek Field”) which is operated and 51% owned by Universal Energy Resources Limited (a Savannah affiliate company).

Highlights of the SIPEC Acquisition

• Increases Savannah’s Reserves and Resources base by approximately 30% from 151 MMboe to 197 MMboe1;
• Highly accretive to group net asset value – management estimated value of SIPEC of US$194 million on a pre-debt basis2;
• Material potential production upside – Savannah now intends to commence an up to 18-month expansion programme which is anticipated to increase Stubb Creek Field gross production from an average of 2.7 Kbopd in 2024 to approximately 4.7 Kbopd;
• Adds 227 Bscf of 2C gross gas Resources at Stubb Creek Field, securing significant additional long-term feedstock gas available for sale to our Accugas customers1; and
• Transaction consideration fully funded through a drawdown under a US$60 million Reserve-Based Lending debt facility arranged by The Standard Bank of South Africa Limited. At completion the cumulative consideration paid was approximately US$35.1 million (inclusive of approximately US$19.5 million of cash available to SIPEC), with US$2 million in deferred cash consideration payable in eight quarterly instalments post-completion.  

About Stubb Creek Field

Stubb Creek Field, located in Akwa Ibom State, Nigeria, is a producing oil field with considerable undeveloped, non-associated 2C gas Resources. As at year end 2024, Stubb Creek Field had an estimated 11 MMstb of 2P gross oil Reserves and 515 Bscf of 2C gross gas Resources1. Commercial oil production started at Stubb Creek Field in 2015, with cumulative production of 8.1 MMstb to 31 December 2024. Oil produced at Stubb Creek Field is processed through production facilities onsite and then exported to the Qua Iboe terminal via a 25 km pipeline. The Stubb Creek Field was converted to a 20-year petroleum mining lease, PML20, in accordance with the Petroleum Industry Act 2021 and effective from 1 December 2023. 

Savannah’s Stubb Creek Field, Oil Processing Facility, Nigeria

Andrew Knott, Chief Executive Officer of Savannah, said:
“We are delighted to announce the completion of the SIPEC Acquisition – the achievement of one of our core business priorities for 2025. Our focus at the Stubb Creek Field will now turn to progressing the expansion project, which we expect to increase production by almost three quarters over the course of 2025/26. I look forward to updating shareholders on this in the coming months, as well as on the progress we make towards achieving the other core business priorities we outlined to shareholders earlier this month.

I would like to thank the Government of Nigeria for the support that they have shown our Company in approving the SIPEC Acquisition and I extend a warm welcome to the SIPEC employees joining Savannah today.”

Savannah have closed the SIPEC acquisition, a stated core objective for the business in 2025,  with all the details previously announced and above. Funded from debt and accretive it is a very smart deal as there is also huge expansion potential, CEO Andrew Knott puts it above as an increase of production by ‘almost three quarters’ over the course of 2025/26. In the meantime, Savannah gains an uplift from its increased share of current production and a c. 30% boost to reserves and resources to 197 MMboe, including 227 Bscf of gross gas resources, which secures significant future feedstock for Accugas customers.

Listening to the investor call last week I’m convinced that he has many more deals in the pipeline in both here in Nigeria as well as in R3 in Niger and elsewhere with large scale wind and hydro projects and potentially with thermal power projects in the pipeline.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog