Montana Renewables Secures $1.44B DOE Commitment for Renewable Fuels and Biomass Facility

On October 16, 2024, Calumet, Inc. announced that the U.S. Department of Energy (DOE) Loan Programs Office (LPO) has granted a conditional commitment for a loan guarantee of up to $1.44 billion. This funding will support the construction and expansion of a renewable fuels facility owned by Montana Renewables, LLC, an unrestricted subsidiary of Calumet. Once expanded, Montana Renewables is expected to become one of the world's largest producers of Sustainable Aviation Fuel (SAF), with an anticipated production capacity of around 300 million gallons of SAF and 330 million gallons of combined SAF and renewable diesel (RD).

Bruce Fleming, CEO of Montana Renewables, expressed gratitude to the DOE LPO team for their partnership throughout this process. He highlighted that the expansion of SAF supply would benefit the local community, the State of Montana, and the broader Pacific Northwest economic region. Fleming also acknowledged the support from local authorities, including Great Falls, Cascade County, and Congressional officials.

The expansion plan includes several individual projects: the addition of a second renewable fuels reactor, which will enable approximately half of the 300 million gallon SAF capability to be operational by 2026; debottlenecking the current renewable fuels and feedstock pretreatment units; and installing SAF blending and logistics assets. Additionally, the plans involve increasing renewable hydrogen production, adding cogeneration for renewable electricity and steam, implementing on-site water treatment and recycling capabilities, and enhancing other site facilities.

Fleming noted that the MaxSAF™ expansion aligns with national interests in low-emission sustainable alternatives. He emphasized that it will replace fossil jet and diesel fuels, reduce Montana Renewables' carbon footprint, and contribute to regional economic growth.

The conditional commitment includes a loan guarantee structured in two tranches. The first tranche, approximately $778 million, is anticipated to close in the fourth quarter of this year. The remaining balance will be disbursed through a delayed draw construction facility, starting at the beginning of construction in 2025 and extending until the expected completion of the MaxSAF™ project in 2028. If finalized, the loan will have a 15-year term and an interest rate pegged to the U.S. Treasury rate plus 3/8%, currently around 4.375%. Principal and interest payments will be deferred until MaxSAF™ is operational.

An initial $150 million equity investment will be made at the closing, with retained earnings from Montana Renewables helping to maintain a 55/45 debt-to-equity ratio during construction. While this commitment marks a significant milestone, certain technical, legal, environmental, and financial conditions must be met before the loan guarantee can be funded.

Calumet's CEO, Todd Borgmann, expressed excitement about collaborating with the DOE to advance the nation's transition to Sustainable Aviation Fuel. He noted that this investment will help leverage their unique renewable hydrogen and pretreatment technologies, positioning Montana Renewables as a major player in the renewable aviation sector, which is critical for reducing emissions in transportation.