Despite numerous challenges, Tidewater nears completion of renewable diesel complex in BC
In its year-end financials released March 9, Tidewater Renewables Ltd. announced that after a year of construction on its renewable diesel complex at the Prince George Refinery in British Columbia, Canada, commissioning of the unit will soon begin.
The company said it expects to complete construction by mid-April and operations will begin in the second quarter.
The unit is scaled to produce approximately 45 million gallons per year.
“The [renewable diesel] complex has endured material-cost pressures, including a challenging labor market, supply-chain issues, specialty-metal shortages, select contractor underperformance and general cost inflation,” the company stated.
As it stands now, the company estimates gross project costs including commissioning at CAD$342 million (USD$248.5 million) compared to the previous estimate of CAD$260 million (USD$188.9 million).
“Gross project costs are expected to be offset by an estimated CAD$125 million (USD$90.9 million) of BC LCFS credits issued by the government of British Columbia, under a Part 3 agreement, for achieving certain construction milestones,” Tidewater Renewables stated.
Tidewater Renewables said it expects to fund the remaining project costs through the sale of BC LCFS credits and with the support of its current capital providers, among other sources.
During the first half of 2023, the corporation expects to receive proceeds of approximately CAD$53 million (USD$38.5 million) for the sale of BC LCFS credits, under executed agreements.
“Despite the cost pressures, the project’s economics remain attractive, and payback is expected in less than three years of operations,” the company stated.
Tidewater Renewables expects production of renewable diesel to gradually ramp up in the second half of 2023, with an average utilization rate between 75 percent to 80 percent of its design capacity.
When operating at design capacity, Tidewater Renewables projects its annualized corporate run rate EBITDA is expected to range between CAD$130 million (USD$94.5 million) and CAD$155 million (USD$112.7 million).
The company also mentioned an offtake agreement it executed Dec. 16 with an investment-grade partner to sell approximately 50 percent of renewable diesel produced at the Prince George Refinery through the end of 2024.
On its annual outlook, Tidewater stated, “For 2023, Tidewater Renewables continues to observe strong industry fundamentals including robust prices for renewable fuels, strong demand for environmental credits, durable government support and expanding environmental commitments and targets. The corporation’s focus remains on safely and successfully commissioning Canada’s first renewable diesel facility. The incremental adjusted EBITDA from the [renewable diesel] complex is expected to launch the next phase of Tidewater Renewables’ growth.”
During the first half of this year, the corporation said it plans to concentrate its capital program on the commissioning of the renewable diesel complex and supporting the planned turnaround at the Prince George Refinery in the second quarter.
Tidewater Renewables expects 2023 maintenance capital to range from CAD$14 million (USD$10.2 million) to CAD$16 million (USD$11.6 million), with the majority of this related to the planned turnaround of its renewable fuel assets at the refinery.
