Developer Of Revolutionary Carbon-Capturing Power Plant To Go Public Via SPAC With Gas-Fracking Rice Bros

The Rice Brothers — Danny, Toby and Derek — have made a fortune in the business of fracking shale gas and remain dedicated to promoting gas as the fastest way to save the world by weaning us off the use of coal. In Danny Rice’s words, they are “100 percent focused on getting as much low cost gas out of the ground as possible.”

To help enable that vision, on Wednesday their second publicly traded shell company (or SPAC) called Rice Acquisition Corp II, announced it would acquire NET Power — an electric power developer with revolutionary new technology.

The deal values NET at $1.46 billion. Existing shareholders including Occidental PetroleumOXY
, Constellation EnergyCEG
, Baker HughesBHI
will roll their equity into the new public company. Both the Rice Family and Oxy will contribute another $100 million in equity each. It’s a serious stamp of approval from serious people who believe in the near limitless potential for power plants utilizing the so-called Allam Cycle.

Whereas nearly all the 18,000 or so fossil fuel-burning power plants around the world just belch their carbon emissions directly into the atmosphere, NET Power’s design uses a system devised by inventor Rodney Allam, which combusts natural gas, but captures and concentrates all of its produced carbon dioxide, enabling it to be put into a pipeline.

This is very helpful when it comes to reducing greenhouse gas emissions — assuming you have somewhere to send that stream of CO2. They have just the spot. NET is engineering its first commercial-sized 300 megawatt plant for construction on Occidental’s land out in Odessa, Texas. There it will run on cheap natural gas recovered from the Permian basin oilfields. As for the 800,000 tons per year of CO2 the plant will make, Oxy intends to take that and put it back into the ground.

Specifically, the carbon dioxide will be compressed into supercritical state and injected deep into mature oil reservoirs — porous oil-soaked layers of rock. Oxy has been operating in the Permian for decades, and has become a specialist in what’s known as enhanced oil recovery — the secondary and tertiary methods that companies use to coax more oil and gas out of depleted rock. When they first tap an oil field, its natural subsurface pressure is often enough to send oil gushing out. After a few years they’ll goose declining output by injecting water, then maybe steam. Lastly, they’ll move to the carbon dioxide flood phase.

As Danny Rice explains, “the carbon dioxide acts as a solvent, like soap on dirt, it washes the oil right out of the rock,” so it can be pumped up the well. What Oxy has found is if you cycle the CO2 through the reservoir enough times, it will become permanently sequestered down there. Verify that you’ve locked the CO2 in the rock, and you can unlock a prodigious pool of federal subsidies.

NET Power’s demonstration plant, in La Porte, Texas, was synchronized with the Texas grid in 2021. Rice says that they hope to get the construction cost of a new 300 mw NET Power plant down to $450 million. Thanks to generous subsidies in the new Inflation Reduction Act, they’ll be able to largely underwrite the plants by collecting $85 per in federal tax credits on each ton of CO2 sequestered for the first 12 years of operation — $70 million per year.

What’s more, Oxy’s vision involves using the power generated by NET plants to run a fleet of direct air capture machines, which will suck carbon dioxide right out of the air and add it to the flows to be sequestered underground.

Danny Rice will be CEO of NET Power, which will be based in Durham, N.C. and have the ticker symbol NPWR.

If everything works as hoped, NET’s access to capital is all but unlimited — equity partner Constellation Energy operates more than 32,000 mw of power generation nationwide. And recall that Berkshire HathawayBRK.B
owns 30% of Occidental, and may grow that to 50%. Berkshire’s Pacificorp division operates more than 70 power plants generating 12,000 mw across the west. While its MidAmerican Energy operates 12,000 mw mostly renewables.

Rice isn’t surprised that a G.E. or Siemens didn’t come along and buy NET Power because it would cannibalize their own business. “We’re direct competition with their core business of combined-cycle power plants,” he says.

This announcement caps off a very busy year for the Rice Brothers since Forbes wrote about them in the magazine a year ago. Danny, with brothers Toby and Derek started in the natural gas business a decade ago, drilling some land in Pennsylvania that their Dad had acquired. They built that company into a juggernaut that they sold to Pittsburgh-based EQTEQT
for $8.2 billion in 2017. A year later they sold a pipeline company for $2.4 billion.

Unhappy with the direction EQT was taking, in 2019 the Rice’s launched and won a proxy fight, which culminated in Toby becoming CEO.

The brothers launched Rice Investment Group to make venture capital investments, and also sponsored their first SPAC, Rice Acquisition Corp. I, which in 2021 combined Aria Energy and Archaea Energy to form a leading developer of landfill gas projects. In October 2022 they announced the sale of Archaea to BP for $4.1 billion.

This year Toby forged a megadeal of his own, with EQT buying leading privately held Appalachian shale gas fracker Tug Hill Operating for $5.2 billion.

Danny continues to serve as chairman of Archaea until the deal closes. He’ll be more involved as CEO at the reorganized NET Power, which he plans to build “into a really large company.”

He says definitively that the Rice bros won’t be launching any more SPACs in the foreseeable future.

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