Jonathan Maurer: This is Jon. That’s kind of a two-parter there. First, this is very specific to a single dairy project out in California, with regard to the change orders that we’re seeing from our EPC contractor out there. It’s essentially related to the — there have been a number of changes to the upgrader facility there and the costs associated with it and the provider of the equipment, that’s really caused the EPC provider a little short. They are asking for increased compensation associated with those projects and that increased compensation is a matter of current discussion. We see that with a resolution of that coming up and we have line of sight to that resolution that these projects will continue on their current pace towards Q3 and Q4, respectively. What was the second half of your question, William?
William Grippin: Sure. It was just — wondering if that’s maybe foreshadowing, cost inflation.
Jonathan Maurer: Oh, cost inflation. No, it’s not. It has to do — there absolutely is cost inflation. So let’s not pretend that there isn’t. But this one is not related to cost inflation. This one is just related to the actual procurement of equipment and difficulties that the EPC provider is having with that or have with that. All that procurement is underway and completed and that it’s not really associated with cost inflation. But the cost inflation piece is real because a lot of the trades, whether they’re the engineering or the civil or the electrical contractors are seeing substantial increase in costs and trying to pass that through. So, that — we’re definitely seeing upward pressure, and some of our equipment providers too are seeing that.
So we’re definitely evaluating the equipment we use and how we procure that. I will say that when we choose the equipment, we really lean towards equipment that has a very high degree of reliability and efficiency. And one of our highest priorities in building projects is to make sure that when we turn those projects on, that they work and work well. And we’ve seen that in project over project. The Emerald project, which started putting gas in the pipeline in the middle of September, is now largely through its ramp-up period. And that is, in our book, very fast period, getting the certification from the EPA this month and allowing us to dispense gas in December for sale of RINs in December, really kind of points to a team that’s kind of running on all cylinders and just to reiterate, building projects that work.
Adam Comora: Yes. The only thing I would add there is, we are always trying to figure out ways to do things more efficiently. And there is no doubt have been inflationary pressures on the cost of these projects. And at the same time, we’re still finding really good projects at those 3 to 4 build multiples. And we are in the mode of making sure that these projects are going to work and work correctly. And that’s really our primary objective when we’re building these plants. Just a reminder, these are 20 to 25-year assets, and after you build them, don’t really require additional capital expenditures, if you build them correctly. And that’s really our primary objective. But we do see some opportunities where we’re hopeful that we can start fighting back some of those inflationary pressures that we saw.
Operator: Our next question comes from Adam Bubes with Goldman Sachs.
Adam Bubes: Nice to see the timing around commercial operations of in construction projects remaining, on track. Can you just help us think about timing between when a plant is commissioned until it starts contributing to turning? Some of the players in the industry have talked about a lag between plant commissioning and earnings contribution as a result of RIN certification and calibrating the right quality of gas. So, just trying to understand what that looks like for you folks?
Jonathan Maurer: Sure, Adam. This is Jon. So, thank you for the question. That’s a little bit what I was trying to get at with my prior answer. So, we started putting gas — as soon as we start putting gas into the pipeline, for the most part, that is going to be future revenue associated with the project. So that gas kind of gets stored, and then we file for — we take gas samples, we then use those gas samples to file for certification. And that certification can take 6 to 8 weeks perhaps. And so, that’s what we saw the certification come for a project that started producing in the middle of September. We got that certification in early November. So, that represents the first lag, if you will, let’s say, 5 or 6 weeks, perhaps.
And then, the second one is with regard to dispensing and creation of the credits. And so, when we dispense in November, those credits will show up in our account in December, really the end of December, and they’ll be available for sale at that time. And if we either have a forward sales agreement in place or we otherwise sell those credits at that time, we can then recognize that income at that time, so now we’re talking about three months past the date. And then receipt of the cash associated with that sale, perhaps a week later or something like that. So if we make a year-end sale, that cash might show up in the next month after that. But, does that help with the timing?
Adam Bubes: Yes. That color is very helpful. Much appreciated. And then, my follow-up, I was wondering if you could just provide any more color on the specific projects in the advance pipeline and expectations for some of the more near-term opportunities to be put in into construction. Particularly interested in hearing if there’s any visibility on the timing of the second SJI partnership facility and the WM partnership project as well?
Jonathan Maurer: Okay. So, great. So, yes, I’ll take that. So, we are definitely excited about our advanced development pipeline and continue to look at 2 million MMBtus in construction this year as our target. We work out multiple opportunities that are very attractive. And these opportunities that we see are really the result of strengthening relationships across the industry. You’ve seen us report on some waste management projects. We continue to report on GFL partnership, the Emerald project being a poster child of that. And the relationship continues to grow, not just on the upstream side, but on the downstream side as well with additional dispensing that we do for GFL. But now, as you pointed out, outside of landfill owners, there’s other strategic partners.
SJI particularly wants to invest in this industry and see decarbonization of their pipeline network. And so by investing in projects like these landfill projects and finding partners who can really execute on those opportunities is really going to be helpful for them. And it’s really a case of where one plus one can make three, where they can get benefits to them and we can execute on further opportunities. We did put the Atlantic project into construction, and we see additional opportunities coming from that relationship, really, the stars continue to align in that area. And that advanced development pipeline really represents the opportunities that are before us. Great development team, and continue to work on that. Adam, maybe you want to add something?
