Maritime Partners, Ardmore Shipping And Element 1 To Form Hydrogen Joint Venture

Ardmore Shipping Corporation, an owner and operator of product and chemical tankers, has announced the company has signed a letter of intent with Element 1 Corporation (E1) and Maritime Partners LLC to propose establishing a joint venture to bring hydrogen power to the marine sector using E1’s technology that converts methanol to hydrogen as a fuel.

Element 1, headquartered in Bend, Ore., is a developer of hydrogen generation systems used to power fuel cells. The Element 1 system has the ability to be used in mobile applications and remote locations, like marine, trucking, off-road vehicles, rail, warehousing and backup power supply. E1’s technology produces hydrogen from methanol on demand and at the point of consumption, thereby eliminating the logistical challenges and costs associated with distributing compressed hydrogen.

Maritime Partners, headquartered in New Orleans, owns a fleet of more than 500 towboats, barges and other maritime assets on long-term charter, primarily on the nation’s inland waterways. 

Under the proposal, Bermuda-based Ardmore, E1 and Maritime Partners will establish “e1 Marine,” with each company owning a third of the joint venture. The new company will have a “worldwide mandate” to market, develop and license E1’s hydrogen generation systems for applications in the marine industry, including shipping, refrigerated containers, offshore energy, renewable energy, passenger and leisure segments, and certain port infrastructure and related applications. The proposal calls for Maritime Partners to invest in Ardmore in the form of $40 million in perpetual preferred shares, with an initial tranche of $25 million followed by a second tranche of $15 million subject to final approval by Maritime Partners. Ardmore, in turn, will purchase a 10 percent equity stake in E1 in exchange for $4 million in cash and 950,000 Ardmore common shares. Ardmore will also take a seat on E1’s board of directors from the date of the investment. Maritime Partners will receive 20 percent of any profits paid to Ardmore from its equity investment in E1.

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The companies expect to close on the joint venture early in the second quarter of 2021.

The announcement of the proposed joint venture disclaimed that the terms of the agreement are subject to the negotiation and execution of definitive agreements and certain closing conditions.

“We are very pleased to establish a strategic relationship with E1 and Maritime Partners to deliver this unique hydrogen delivery system to the marine sector,” said Ardmore CEO Anthony Gurnee. “The establishment of e1 Marine and our investment in E1 advance our ‘Energy Transition Plan,’ which includes a focus on transition technologies aimed at reducing carbon emissions in the shipping industry and utilizing Ardmore’s engineering and marketing capabilities to accelerate their deployment.”

Gurnee went on to declare E1’s methanol-to-hydrogen technology be “safer and cheaper than other alternatives for onboard hydrogen delivery.” In addition, using standard methanol as the feedstock for the hydrogen fuel “is operationally cost competitive with diesel engines even today, while emitting zero particulates, zero NOx, zero SOx and 30 to 50 percent less carbon than a diesel engine of the same power rating,” Gurnee said.

“The E1 system is carbon-neutral when run on renewable methanol, should prove to be very cost competitive with other alternatives and, if desired, can be built or retrofitted to run on ammonia,” he said.

E1co-founder and CEO Dave Edlund said he expects his company’s technology, plus the strategic partnership with Ardmore and Maritime Partners, will pave the way for increased usage of hydrogen as a true marine fuel.

“Whereas fuel cell technology has matured substantially over recent decades, the supply of hydrogen as feedstock to fuel cells has lagged considerably, resulting in significant logistic and economic challenges to the wide-scale deployment of fuel cells,” Edlund said. “E1’s methanol-to-hydrogen technology offers a broad solution to this challenge. Importantly, Ardmore and Maritime Partners provide unique access to existing markets in international shipping and inland waterways.”

Maritime Partners co-founder and CEO Bick Brooks echoed that anticipation.

“We are pleased to partner with E1 and Ardmore to drive the adoption of E1’s hydrogen purification technology across the global maritime landscape,” Brooks said. “We are particularly excited about the applications for this technology within the inland marine industry, as it offers the potential to materially lower carbon emissions in the near term and provide a clear path to achieving a zero-carbon footprint. Importantly, we believe this technology is currently cost competitive with diesel internal combustion engines.

“Ardmore has an excellent track record of financial discipline,” Brooks added. “Accordingly, we look forward to aligning with Ardmore beyond the joint venture and to supporting Ardmore’s accretive growth ambitions through our preferred equity investment.”