More money is betting on the former executives of Rice Energy Inc. to lead investors through the so-called energy transition.
Two months after announcing that their first special purpose acquisition company, Rice Acquisition Corp. had found a pair of companies to buy for $1.2 billion, the crew is at it again.
Rice Acquisition Corp. II went public last week under the ticker RONI — because inside jokes are their jam — raising $345 million. Like the last SPAC, which raised $237 million through its initial public offering in October, this one is interested in businesses that can decarbonize heavy industry.
SPACs are blank-check companies that raise public money and then use it to acquire a business.
The Rice SPACs, one and two, said in their public documents that they might pursue opportunities in things like “renewable fuels, sustainable chemical production and feedstocks, carbon capture, utilization and storage technology and equipment, applications, infrastructure and technology focused on reducing the carbon intensity of fuels, energy production methods, and industrial processes.”
In April, the first Rice SPAC announced a deal to buy Canonsburg-based Archaea Energy LLC and Michigan-based Aria Energy LLC, both developers of projects that capture gas produced by decomposing landfill materials. (Uncaptured landfill gas is a major source of emissions that worsen climate change.)
Archaea was already majority owned by the Rice crew, through its private equity fund, Rice Investment Group, based in Carnegie. Started by brothers Danny, Toby and Derek and other Rice Energy alumni, including Kyle Derham, it has invested mostly but not exclusively in oil- and gas-related businesses with some kind of technology hook.
Danny Rice, who sits on the board of EQT Corp. — which bought Rice Energy Inc in 2017 for $6.7 billion, making it the largest natural gas producer in the country — has said he is not trying to move away from natural gas with his SPAC investments. He believes that natural gas, unlike coal, will be a large part of the energy picture for decades to come and can be used lessen the carbon footprint of heavy industry.
The current buzz around how natural gas further the energy transition, beyond simply putting coal plants out of business, is through the production of hydrogen. The idea of isolating hydrogen from natural gas and then capturing and sequestering the carbon dioxide made in the process is referred to as blue hydrogen. Hydrogen can also be made by splitting water molecules and using renewable energy to power that process, called green hydrogen.
Blue hydrogen has captured the imagination of many in the oil and gas industry, since it secures a future for fossil fuels and is predicated on the promise of repurposing existing pipelines to carry increasing amounts of hydrogen — first blended into the natural gas mix and eventually on its own.
Toby Rice, who is now the CEO of EQT Corp., has shown interest in this cause.
His company recently joined U.S. Steel and officials from local universities and government officials to talk about starting a manufacturing decarbonization center in southwestern Pennsylvania based on hydrogen derived from natural gas.
Archaea’s vision also includes developing carbon capture and sequestration capabilities and producing hydrogen from landfill gas, which the company said would be considered a green fuel.
It remains to be seen if similar themes surface in the second Rice SPAC, which has two years to acquire a company.
Anya Litvak: alitvak@post-gazette.com
First Published: June 22, 2021, 9:40 a.m.
