Tidewater Renewables enters strategic RNG partnership
RCC and its affiliates are one of the largest cattle feeding operations in North America. The partnership will secure feedstock supply for both Tidewater’s RNG and Renewable Diesel business units while accelerating the diversification of Tidewater’s RNG low carbon-intensity fuels product offering.
The partnership will provide a material addition to Tidewater’s RNG production capabilities and is expected to be secured by 10 to 20-year offtake agreements with investment-grade counterparties.
Feedlot Inventory and Feedstock Ownership Partnership
The partnership aligns Rimrock and Tidewater, secures feedstock supply for Tidewater, and allows each party to focus on their core competencies to build and advance RNG projects. Tidewater will invest $30 million (€27.6 million) in exchange for a 50% ownership of RCC, including its associated cattle feeding operations (Feedlot Infrastructure) and cattle inventory. Tidewater’s investment will be paid for in four equal quarterly instalments starting in April.
Feedlot Inventory and Feedstock Ownership Partnership highlights
RCC is expected to control almost half the required feedstock for Tidewater Renewables’s Renewable Diesel facility (HDRC Facility) in the form of tallow once the plant is operating at full capacity. In combination with Tidewater’s other feedstock sourcing activities, the partnership de-risks the HDRD Facility’s feedstock supply requirements.
RCC is also expected to produce all the feedstock for the RNG facilities that make up the partnership, de-risking their feedstock supply requirement.
RNG Facilities Partnership
Upon entering into the partnership, Tidewater and Rimrock plan to build and evaluate several projects across North America through a separate partnership (the RNG Facilities Partnership). The companies plan to start construction on their first Alberta-based RNG facility at High River. The High River Facility is expected to have a gross capital cost of $65-70 million (€59.8-64.4 million) and has received material government grand support.
Tidewater’s net equity investment is expected to be approximately $10 million (€9.2 million) and the corporation will retain a 51% ownership in the RNG Facilities Partnership. The High River Facility is expected to generate gross annual EBIDTA of around $10 million (€9.2 million) - approximately $5 million (€4.6 million) net to Tidewater.
Tidewater and Rimrock are also evaluating three additional RNG facilities located in Alberta and Nebraska. Each project is expected to attract material government support which dramatically improves project economics. Tidewater is pursuing 10 to 20-year investment-grade offtake agreements.
Tidewater will retain a right of first refusal on all future RNG facilities evaluated by Rimrock.
Under the terms of the partnership, RCC will continue to operate the Feedlot Infrastructure and Tidewater will operate the RNG facilities, each leveraging their expertise. The Feedlot Infrastructure also includes 7,200 acres of land in Alberta and Saskatchewan, providing further low-cost feedstock supply for the HDRD Facility and ‘significant’ economic upside.