Irving Oil's emissions-reduction partner lost $161M

One of Irving Oil's key partners in its effort to reduce greenhouse gas emissions is facing an uncertain future.

Anaergia Inc., which signed a contract last year to supply Irving's Saint John refinery with what it called carbon-negative natural gas, suffered steep financial losses last year and acknowledged it might not be able to continue operating.

The company reported losses of $161.6 million in the first nine months of 2023.

Efforts so far to improve profitability may not be enough, the company disclosed in regulatory filings last November, forcing it to rely on the "forbearance" of its creditors for more time to pay its bills.

"There can be no assurance, however, that the company can reach profitability, secure adequate debt or equity financing, or implement assets sales on desirable terms, within the necessary time frames or at all," said a Nov. 14, 2023, management discussion of results.

"These material uncertainties raise significant doubt about the company's ability to continue as a going concern."

Last year Anaergia said gas from its Rhode Island plant, seen here, was supposed to be flowing by pipeline to Irving's Saint John refinery 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 — New Brunswick's biggest emitter of climate-changing greenhouse gases —  with natural gas from food and other organic waste.

That would reduce Irving Oil's use of conventional GHG-emitting natural gas and divert 100,000 tonnes of waste from landfills, avoiding 40,000 metric tonnes 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 cut emissions from its operations and its energy sources by 30 per cent by 2030.

"We believe RNG provides a powerful opportunity for the efficient decarbonization of our operations," says the report, which adds the company is about halfway to its 2030 goal.

But the filings with security regulators raise questions about the viability of Anaergia's role in that effort.

Last year Anaergia said gas from its Rhode Island plant was supposed to be flowing by pipeline to the refinery in the summer of 2023.

But in interim 2023 financial statements filed last November, it said it was borrowing $20 million "to finance remaining construction and commissioning" of the plant.

This image from a May 17, 2024, filing shows Anaergia's stock performance compared to the S&P/TSX Composite Index on the Toronto Stock Exchange. (Anaergia Inc.)

They also disclosed that "management has determined 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 "remediate" those weaknesses or prevent more in the future, it said.

Irving Oil and Anaergia did not respond to questions from CBC News about the status of the partnership or whether gas is now moving from Rhode Island to Saint John.

Anaergia isn't 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 refile financial results in August 2022 after learning it didn't comply with established reporting standards.

It was also late filing its 2022 audited financial statements because its accountants spotted "a potential adjustment" in how it was accounting for a recent acquisition.

The Ontario Securities Commission issued a cease-trading order for Anaergia stock on April 8 of this year, citing another failure to file statements on time, this time for 2023.

Its share price, as high as $26.20 in September 2021, has been 29 cents since the day trading stopped.

Anaergia said on May 20 the timing for the audited statements was "uncertain" but it was aiming for the first half of June.

The company is based in Burlington, Ont., 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 the former premier's board position was "coincidental" and unrelated to the gas contract.

McKenna left the board on May 5 to make way, the company said, for a new director from a European investment firm putting $40.8 million into Anaergia.

That deal hadn't closed yet, but "given the unanticipated and extended delay … Mr. McKenna has to attend to other prior commitments" and was resigning regardless, Anaergia said in a May 5 press release.

"Mr. McKenna remains a dedicated advocate of Anaergia's business," it added.