Calumet announced that the US Department of Energy (DOE) Loan Programs Office has approved a conditional commitment for a loan guarantee of up to $1.44 billion to support the construction and expansion of a renewable fuels facility owned by Montana Renewables LLC. Montana Renewables is a wholly owned subsidiary of Calumet.
The expansion will solidify Montana Renewables‘ position as a global leader in sustainable aviation fuel (SAF) production, with a projected capacity of approximately 300 million gallons of SAF and 330 million gallons of combined SAF and renewable diesel (RD) annually.
Bruce Fleming, CEO of Montana Renewables, expressed gratitude for the DOE LPO team’s dedication and support throughout the process.
“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,” Fleming added.
MRL plans to execute a series of projects, including a second renewable fuels reactor to increase SAF production capacity, debottlenecking existing units, installing SAF blending and logistics assets, expanding renewable hydrogen production, adding cogeneration capabilities, implementing on-site water treatment and recycling, and making other site enhancements.
Fleming stated that the MaxSAF™ expansion aligns with national efforts to promote low-emission sustainable alternatives. The project will replace fossil jet and diesel fuels, reduce MRL’s carbon footprint, and contribute to regional economic development.
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MRL anticipates that the expansion will stimulate additional regional development, particularly in the area of renewable feedstock sourcing from farms and ranches.
By driving local infrastructure development in transportation, agriculture, and energy-related businesses, MRL will create a large-scale, end-to-end SAF industry involving public and private partners in Montana and the Pacific Northwest.
The MRL expansion is expected to generate up to 450 construction jobs and 40 operations jobs at its peak.
Conditional Commitment Framework
The Conditional Commitment outlines a loan guarantee structured in two tranches. The first tranche of approximately $778 million is anticipated to close in the fourth quarter of this year, followed by the disbursement of the remaining loan guarantee through a delayed draw construction facility from the beginning of construction in 2025 to the anticipated completion of the MaxSAF™ project in 2028.
If finalized, the loan will have a 15-year tenor and an annual interest rate of the US Treasury rate plus 3/8% when issued (currently approximately 4 3/8%). Principal and interest payments 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.
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