Calumet has announced that the US Department of Energy (DOE) Loan Programs Office has granted a conditional commitment for a loan guarantee of up to $1.44 billion to support the construction and expansion of a renewable fuels facility operated by Montana Renewables LLC, a wholly owned subsidiary of Calumet.
This expansion is set to establish Montana Renewables as a leader in sustainable aviation fuel (SAF) production, aiming for a projected capacity of approximately 300 million gallons of SAF and a total of 330 million gallons when combining SAF and renewable diesel (RD) annually.
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Bruce Fleming, CEO of Montana Renewables, expressed appreciation for the dedication and support provided by the DOE LPO team throughout the approval process.
Montana Renewables plans to implement a series of initiatives, including adding a second renewable fuels reactor to enhance SAF production capacity, optimizing existing units, installing SAF blending and logistics assets, increasing renewable hydrogen production, adding cogeneration capabilities, and implementing on-site water treatment and recycling, among other enhancements.
Fleming noted that the MaxSAF™ expansion aligns with national initiatives to promote low-emission, sustainable alternatives.
The project is expected to replace fossil jet and diesel fuels, reduce the carbon footprint of Montana Renewables, and contribute to regional economic development.
The expansion is also anticipated to drive additional regional development, particularly in sourcing renewable feedstocks from local farms and ranches.
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Montana Renewables aims to create a comprehensive SAF industry that involves both public and private partners in Montana and the Pacific Northwest by fostering local infrastructure development across transportation, agriculture, and energy sectors.
The project is expected to generate up to 450 jobs during construction and 40 operational jobs at its peak.
The Conditional Commitment framework outlines a loan guarantee structured in two tranches.
The first tranche, approximately $778 million, is expected to close in the fourth quarter of this year. The remaining loan guarantee will be disbursed through a delayed draw construction facility starting in 2025, with completion of the MaxSAF™ project anticipated in 2028.
If finalized, the loan will feature a 15-year tenor and an interest rate set at the U.S. Treasury rate plus 3/8%, currently about 4 3/8%. Principal and interest payments will be deferred until the MaxSAF™ project is commissioned.
An equity investment of $150 million will be made at the initial closing, with retained earnings from Montana Renewables supplementing DOE funds to maintain a 55/45 debt-to-equity ratio throughout the construction of the MaxSAF™ project.