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Irving Oil’s emissions reduction partner lost $161 million
One of Irving Oil’s key partners in its effort to reduce greenhouse gas emissions faces an uncertain future.
Anaergia Inc., which signed a contract last year to supply the Irving Saint John refinery with what it called carbon-negative natural gas, suffered steep financial losses last year and acknowledged it may not be able to continue operating.
The company reported losses of US$161.6 million in the first nine months of 2023.
Efforts so far to improve profitability may not be enough, the company revealed in regulatory filings last November, forcing it to rely on the “forbearance” of its creditors to get more time to pay its bills.
“There can be no assurance, however, that the company can achieve profitability, secure adequate debt or equity financing, or implement asset sales on desirable terms, within the required timeframes or at all,” said a management statement dated 14 November 2023. discussion of results.
“These material uncertainties raise significant doubts about the company’s ability to continue as a going concern.”
Last year, Anaergia said gas from its Rhode Island plant, seen here, should flow by pipeline to the Irving refinery in Saint John in the summer of 2023. (Google Maps)
Irving Oil announced in January 2023 that an Anaergia bioenergy plant in Rhode Island would supply the refinery — the largest emitter of climate-changing greenhouse gases in New Brunswick — with natural gas from food and other organic waste.
This would reduce Irving Oil’s use of GHG-emitting conventional natural gas and divert 100,000 tons of waste from landfills, avoiding 40,000 tons per year of emissions.
In its most recent sustainability report, Irving Oil called renewable natural gas “a strategic part of our energy transition portfolio,” which aims to reduce emissions from its operations and energy sources by 30 percent by 2030.
“We believe RNG provides a powerful opportunity to efficiently decarbonize our operations,” states the report, which adds that the company is halfway to its 2030 goal.
But filings with safety regulators raise questions about the viability of Anaergia’s role in that effort.
Last year, Anaergia said gas from its Rhode Island plant was expected to flow via pipeline to the refinery in the summer of 2023.
But in interim 2023 financial statements filed last November, the company said it was borrowing $20 million “to finance the remaining construction and commissioning” of the plant.
They also revealed that “management has determined that there is a material weakness in internal control over financial reporting.”
“No assurance can be provided at this time” that the company would be able to “cure” these weaknesses or prevent more in the future, it said.
Irving Oil and Anaergia did not respond to CBC News’ questions about the status of the partnership or whether gas is now being moved from Rhode Island to Saint John.
Anaergy is not the refinery’s only source of renewable natural gas. Last November, Irving announced a contract with an Alberta-based RNG plant operating on a family-owned potato farm near Lethbridge, Alberta.
According to public documents, Anaergia had to resubmit financial results in August 2022 after learning that it did not meet established reporting standards.
It also delayed filing its 2022 audited financial statements because its accountants detected “a potential adjustment” in the way it was accounting for a recent acquisition.
The Ontario Securities Commission issued a cease-trading order in Anaergia shares on April 8 of this year, citing another failure to file statements on time, this time for 2023.
Its share price, which peaked at $26.20 in September 2021, has been 29 cents since the day trading was halted.
Anaergia said on May 20 that the timing of the audited statements was “uncertain” but that the target was the first half of June.
The company is based in Burlington, Ontario, and until earlier this year, former New Brunswick premier Frank McKenna was a member of its board of directors.
McKenna is a longtime booster of Irving Oil projects, but Anaergia chief operating officer Yaniv Scherson told CBC News last year that the former prime minister’s position on the board was “coincidental” and unrelated with the gas contract.
McKenna stepped down from the board on May 5 to make way, the company said, for a new director from a European investment firm that invested $40.8 million in Anaergia.
That deal had not yet been reached, but “given the unforeseen and prolonged delay… Mr. McKenna has to meet other prior commitments” and was resigning anyway, Anaergia said in a May 5 press release .
“Mr. McKenna continues to be a dedicated advocate for Anaergia’s business,” he added.