Montana Renewables to expand SAF capacity
Calumet Speciality announced financial results for the third quarter of 2024 wherein it reported that it plans to supplement sustainable aviation fuel (SAF) production capacity at Montana Renewables fuels site to 150mm gallons per annum.
The company said the expansion will be funded via the Department of Energy loans guarantee. “We’ve carved out a market leadership position in the high-growth market of sustainable aviation fuel. And with the DOE loan, we expect to leverage this early mover advantage into a global leadership position,” said Todd Borgmann, CEO, Calumet during the earnings call.
In the next two years, the plans to install the previously-acquired second reactor with an expected capital expenditure of $150-250m.
Moreover, over the course of three to four years, the company plans to add another 150mm gallons per annum via the execution of other project modules including renewable hydrogen production, expansion of existing renewable fuels unit and feedstock pretreatment unit, wastewater treatment, renewable electricity and steam via cogeneration, SAF truck rack capability and other efficiency projects.
“Further, the MaxSAF project is designed to be modular, or a set of discrete projects in series. The first module is standing up the second SAF reactor that was purchased in 2022. We expect the first reactor step, which we’re calling MaxSAF 150, to take roughly two years and to increase Montana Renewables’ SAF capacity to 150mgallons annually. An early estimate of the capital required to accomplish this is $150m to $250m. Thus, MRL is planning to invest $65m to $115m of retained earnings over the next two years, with the DOE loan being drawn for the remainder,” said Borgmann.
The company further added that it plans to draw tranche 2 funding of the DOE loan during the construction subject to satisfaction of other customary conditions precedent.
The results further showed that the company’s adjusted EBITDA from Montana Renewables during the quarter narrowed sharply to $12.7m compared to $38.2m in the same period last year. The company attributed the decline to negative impact to margins from the feedstock price lags.
Further breakdown of $12.7m EBIDTA showed, nearly $6m came from the renewables business (including SAF and renewable diesel) with the remainder $6.7bn coming from asphalt segment.
The company achieved record SAF production of over 2,600 barrels per day of SAF. Overall, the company produced 10m gallons of SAF in third quarter.