- Montana Renewables to expand Sustainable Aviation Fuel
capacity by 300 million gallons per year
INDIANAPOLIS, Oct. 16,
2024 /PRNewswire/ -- Calumet, Inc. (NASDAQ: CLMT)
("Calumet," "we," "our" or "us") announced today that the U.S.
Department of Energy ("DOE") Loan Programs Office ("LPO") has
awarded a conditional commitment for a loan guarantee of up to
$1.44 billion to fund the
construction and expansion of a renewable fuels facility owned by
Montana Renewables, LLC ("Montana Renewables" or "MRL").
Montana Renewables is an unrestricted subsidiary of Calumet.
The expansion would position Montana Renewables as one of the
largest Sustainable Aviation Fuel ("SAF") producers globally with
production capacity of approximately 300 million gallons of SAF and
330 million gallons of combined SAF and renewable diesel
("RD").
"We would like to thank the DOE LPO team for its dedication and
partnership during this process," said Bruce Fleming, CEO of
Montana Renewables. "Furthermore, our commitment to expanding SAF
supply benefits the local community, the State of Montana, and the Pacific Northwest
economic region. We are grateful for the
steadfast support received from Great Falls, Cascade
County, the State of
Montana and Congressional officials and authorities."
MRL expects to execute a sequence of discrete individual
projects including: a second renewable fuels reactor (allowing
approximately half of the 300 million gallon SAF capability to be
online by 2026); debottlenecking of the existing renewable fuels
and feedstock pretreatment units; installation of SAF blending and
logistics assets; increased renewable hydrogen production; addition
of cogeneration for renewable electricity and steam; on-site water
treatment and recycling capabilities; and other site
enhancements.
"Our MaxSAF™ planned expansion is fully aligned with
strategic national interest in low-emission sustainable
alternatives," Fleming continued. "The expansion will directly
replace fossil jet and diesel; reduce MRL's carbon footprint by
producing more renewable hydrogen and electricity; and contribute
to regional economic development."
Regional Development
An economic impact study1 produced by the
University of Montana Bureau of
Business and Economic Research (BBER) measured the substantial
benefit to Montana in the form of
jobs, income, government revenues, economic output and population.
For example, by 2028, the economic footprint of the Great Falls site is expected to support a
population of 4,400 Montanans, consisting primarily of working-aged
families and their children.
MRL expects the expansion to catalyze additional regional
development, particularly for renewable feedstocks sourced from
farms and ranches. By driving local infrastructure development in
transportation, agricultural and energy related businesses similar
to the Minnesota SAF Hub, MRL will create a large-scale, end-to-end
SAF industry comprised of public and private partners in
Montana and the Pacific
Northwest.
The MRL expansion is expected to create, at its peak, 450
construction jobs and up to 40 operations jobs.
Conditional Commitment Framework
The Conditional Commitment contemplates a loan guarantee
structured in two tranches. The first tranche of approximately
$778 million is expected to close in
the fourth quarter of this year, and the balance of the loan
guarantee is to be disbursed through a delayed draw construction
facility from the beginning of construction in 2025 through the
anticipated completion of the MaxSAF™ project in
2028.
If finalized, the loan will have a 15-year tenor and an annual
interest rate at the U.S. Treasury rate plus 3/8% when issued
(currently approximately 4 3/8%). Servicing of principal and
interest will be deferred until MaxSAF™ is commissioned.
A $150 million equity investment
will be made at the initial closing. Retained earnings from MRL
will supplement DOE funds to maintain a 55/45 debt to equity ratio
during the MaxSAF™ construction sequence.
While this conditional commitment represents a significant
milestone and demonstrates DOE's intent to finance the project,
certain technical, legal, environmental and financial conditions,
including negotiation of definitive financing documents, must be
satisfied before funding of the loan guarantee.
"Through our collaboration with the U.S. Department of Energy,
we are thrilled to continue forward on the leading edge of our
nation's Sustainable Aviation Fuel transition," said Calumet's CEO
Todd Borgmann. "This investment will
allow us to leverage our first-mover advantage and unique renewable
hydrogen and pretreatment technologies to transform Montana
Renewables into a world scale SAF producer. Through this
conditional commitment, the U.S. is leading the world in renewable
aviation, the hardest to abate sector in transportation, while
demonstrating our country's innovation and technical leadership.
Innovation is at the heart of what we do at Calumet and we are
honored that Montana Renewables can help solidify our nation's
position as a global leader in the one of energy's fastest growing
niches."
About SAF
Sustainable Aviation Fuel (SAF) is a
combination of synthetic paraffinic kerosene (SPK) and conventional
jet fuel meeting ASTM D7566 and ASTM D1655 specifications. Designed
to reduce the aviation industry's carbon footprint, SAF is drop-in
compatible with existing aviation fueling infrastructure and
aircraft engine technology. SAF volumes in this press release refer
to 100% renewable SPK.
About Montana Renewables
Montana Renewables is a
leading renewable fuel company located in Great Falls, Montana. MRL produces Sustainable
Aviation Fuel, Renewable Diesel, Renewable Hydrogen and Renewable
Naphtha. As the largest SAF producer in North America (2024), MRL is dedicated to
meeting the increasing demand for sustainable fuels and to
supporting a greener future. As a Great
Falls business leader, MRL offers high-paying jobs and
career opportunities while supporting the local economy and
contributing to the community's overall well-being. Pacific
Northwest farm and ranch operations ultimately provide MRL with
sustainable, renewable, low-carbon feedstocks and agricultural
byproducts including tallow, distillers corn oil, canola oil, used
cooking oil and camelina oil. These feedstocks are converted
to renewable transportation fuels which have lower emissions
compared to conventional fossil fuels. MRL is an unrestricted
subsidiary of Calumet, Inc.
About Calumet
Calumet, Inc. (NASDAQ: CLMT)
manufactures, formulates, and markets a diversified slate of
specialty branded products and renewable fuels to customers across
a broad range of consumer-facing and industrial markets. Calumet is
headquartered in Indianapolis,
Indiana and operates twelve facilities throughout
North America.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements and information in this press release may
constitute "forward-looking statements." The words "will," "may,"
"intend," "believe," "expect," "outlook," "forecast," "anticipate,"
"estimate," "continue," "plan," "should," "could," "would," or
other similar expressions are intended to identify forward-looking
statements, which are generally not historical in nature. The
statements discussed in this press release that are not purely
historical data are forward-looking statements, including, but not
limited to, the statements regarding (i) our expectations regarding
the loan facility (the "DOE Facility") that MRL expects to receive
from the DOE LPO, including the timing, size and intended use of
borrowings under such facility, (ii) our expectation that the
DOE Facility will enable MRL to complete the
MaxSAF™ construction and that such project will be completed
on time and on budget, (iii) whether and when the DOE Facility will
be funded, including whether and when certain conditions such as
negotiation of definitive financing documents will be satisfied,
(iv) our expectation regarding our business outlook and cash flows,
including with respect to the Montana Renewables business, and (v)
our ability to meet our financial commitments, debt service
obligations, debt instrument covenants, contingencies and
anticipated capital expenditures. These forward-looking statements
are based on our current expectations and beliefs concerning future
developments and their potential effect on us. Our forward-looking
statements involve significant risks and uncertainties (some of
which are beyond our control) and assumptions that could cause our
actual results to differ materially from our historical experience
and our present expectations or projections. Known material factors
that could cause actual results to differ materially from those in
the forward-looking statements include, but not limited to: the
overall demand for renewable fuels, including SAF and RD; our
ability to produce renewable fuel products that meet our customers'
unique and precise specifications; the marketing of alternative and
competing products; the impact of fluctuations and rapid increases
or decreases in renewable fuel margins, including the resulting
impact on our liquidity; our ability to comply with financial
covenants contained in our debt instruments; labor relations; our
access to capital to fund expansions, acquisitions and our working
capital needs and our ability to obtain debt or equity financing on
satisfactory terms; environmental liabilities or events that are
not covered by an indemnity, insurance or existing reserves;
maintenance of our credit ratings and ability to receive open
credit lines from our suppliers; demand for various feedstocks and
resulting changes in pricing conditions; fluctuations in refinery
capacity; our ability to access sufficient feedstocks; the effects
of competition; continued creditworthiness of, and performance by,
counterparties; the impact of current and future laws, rulings and
governmental regulations shortages or cost increases of power
supplies, natural gas, materials or labor; weather interference
with business operations; our ability to access the debt and equity
markets; accidents or other unscheduled shutdowns; and general
economic, market, business or political conditions, including
inflationary pressures, instability in financial institutions,
general economic slowdown or a recession, political tensions,
conflicts and war (such as the ongoing conflicts in Ukraine and the Middle East and their regional and global
ramifications).
For additional information regarding factors that could cause
our actual results to differ from our projected results, please see
our filings with the SEC, including the risk factors and other
cautionary statements in the latest Annual Report on Form 10-K of
Calumet Specialty Products Partners, L.P. (the "Partnership") and
other filings with the SEC by Calumet, Inc. and the
Partnership.
We caution that these statements are not guarantees of future
performance and you should not rely unduly on them, as they involve
risks, uncertainties, and assumptions that we cannot predict. In
addition, we have based many of these forward-looking statements on
assumptions about future events that may prove to be inaccurate.
While our management considers these assumptions to be reasonable,
they are inherently subject to significant business, economic,
competitive, regulatory and other risks, contingencies and
uncertainties, most of which are difficult to predict and many of
which are beyond our control. Accordingly, our actual results may
differ materially from the future performance that we have
expressed or forecast in our forward-looking statements. Readers
are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date they are made. We
undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise, except to
the extent required by applicable law. Certain public statements
made by us and our representatives on the date hereof may also
contain forward-looking statements, which are qualified in their
entirety by the cautionary statements contained above.
1
https://www.bber.umt.edu/pubs/Econ/Calumet-Impact-Report.pdf
View original
content:https://www.prnewswire.com/news-releases/montana-renewables-receives-1-44-billion-conditional-commitment-from-doe-for-renewable-fuels-and-biomass-energy-facility-302278484.html
SOURCE Calumet, Inc.