- Alberta Research Council estimated Canada’s RNG production potential equivalent to 1,200 billion cubic feet annually, equal to ~1/3 of 2017 natural gas consumption
- EverGen Infrastructure is leading the trend towards RNG, owning/operating 4 projects in western Canada with expansion into Ontario through 50% ownership in a large-scale project
- Flush with cash, EverGen is expanding aggressively, with expectations for core projects to generate a range of $50-$60 million in annual revenue
Canada is stepping up its game in a bid to meet its goal of net zero emissions by 2050, a benchmark that has become the target of many countries worldwide. Currently, over 140 countries have officially set targets or are considering a net zero by 2050 commitment. In June 2021, Canada passed the Canadian Net-Zero Emissions Accountability Act, enshrining its vision into law, promptly following that in July by lowering its mid-term goal to emissions levels of 40-45% of 2005 levels by 2030, versus a prior mark of 30 percent. The regulatory atmosphere and social awareness situation couldn’t be better for companies like EverGen Infrastructure (TSX.V: EVGN) (OTCQX: EVGIF), which is aggressively expanding nationwide with its Renewable Natural Gas (“RNG”) infrastructure platform.
RNG is just like the name implies. Organic waste from sustainable sources such as farms, landfills, and sewage treatment plants are processed, creating a biogas refined into biomethane as output that is equivalent to conventional natural gas and ready for injection into existing pipelines. The digestate byproduct from the process provides solid and liquid end-products for use in other applications, such as fertilizer. The beauty of RNG is that it is produced from infinite sources, as humans and animals will forever produce waste. Decomposing waste contains large amounts of methane, carbon dioxide and hydrogen sulfide. Separating the methane from the contaminants and refining it to 95+ percent purity (just like traditional natural gas) spares the atmosphere from greenhouses gases being burned off or naturally emitted where they contribute to climate change.
It goes without mentioning that RNG creates clean gas without drilling a single hole in the ground, a criticism of natural gas production.
In the trend towards reuse and sustainability, RNG will play a substantial role. Natural gas is not only used in in homes and businesses, but also increasingly becoming popular in the transportation industry to cleanly power vehicles. In a 2013 report, the Alberta Research Council estimated Canada’s RNG production potential equivalent to 1,200 billion cubic feet annually. That’s more than one-third of the country’s natural gas consumption in 2017. On the continent level, North American gas utilities are targeting 5-15% renewables by volume compared to less than 1% today.
Amassing an impressive portfolio of projects and partners, EverGen is establishing itself as a name brand in the RNG industry. The British Columbia-based company acquires, develops, owns, and operates RNG projects using a platform approach to reliably build sustainable infrastructure to supply the North American gas grid with clean energy from organic waste. In the high-merging business, EverGen’s near-term pipeline has the potential to generate over $30 million in annual adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
EverGen began building its footprint with projects in its home province before moving east to where it now has operations in B.C., Alberta, and Ontario. The company currently has, owns and operates 4 RNG and/or organic processing facilities: Net Zero Waste Abbottsford (B.C), Fraser Valley Biogas (B.C), Sea to Sky Soils (B.C.), and 67% ownership in GrowTEC (Alberta). EverGen also has a 50% stake in Project Radius, a large, 3-phase RNG project in Ontario.
RNG produced at Net Zero Waste Abbottsford, Fraser Valley Biogas, and GrowTEC is bought by FortisBC via long-term (10-20 years) offtake agreements. In September, FortisBC agreed to purchase up to 190,000 gigajoules annually of RNG from Fraser Valley Biogas, meaning they’ll take what is produced currently, as well as securing future production as the project is currently being expanded.
At GrowTEC, RNG expansion is now 80 percent complete. To maintain its aggressive growth strategy, EverGen recently signed a term sheet for $31 million Senior Term Loan with its existing lender, a subsidiary of Scotiabank. Ultimately being a nice backstop to the $12.8 million in cash on hand at the end of the third quarter, inclusive of $3.5 million already earmarked for expansion projects.
By 2024, it is expected that the core group of projects can be producing 2 million gigajoules annually. At $25-$30 per gigajoule, that translates to $50-$60 million in revenue for EverGen.
For more information, visit the company’s website at www.EverGenInfra.com.
NOTE TO INVESTORS: The latest news and updates relating to EVGIF are available in the company’s newsroom at https://ibn.fm/EVGIF
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