Montana Renewables receives $1.44 billion conditional commitment from DOE for MaxSAF™ project

Calumet Inc. announced Oct. 16 that the U.S. DOE Loan Programs Office has awarded a conditional commitment for a loan guarantee of up to $1.44 billion to fund the construction and expansion of a renewable fuels facility owned by Montana Renewables LLC.

The expansion would position Montana Renewables as one of the largest sustainable aviation fuel (SAF) producers globally with production capacity of approximately 300 million gallons of SAF and 330 million gallons of combined SAF and renewable diesel.

“We would like to thank the DOE LPO team for its dedication and partnership during this process,” said Bruce Fleming, CEO of Montana Renewables. “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.”

Montana Renewables expects to execute a sequence of discrete individual projects including:

A second renewable fuels reactor, allowing approximately half of the 300-million-gallon SAF capability to be online by 2026.

Debottlenecking of the existing renewable fuels and feedstock-pretreatment units.

Installation of SAF blending and logistics assets.

Increased renewable hydrogen production.

Addition of cogeneration for renewable electricity and steam.

On-site water treatment and recycling capabilities.

And other site enhancements.

“Our MaxSAF™ planned expansion is fully aligned with strategic national interest in low-emission sustainable alternatives,” Fleming continued. “The expansion will directly replace fossil jet and diesel, reduce Montana Renewables’ carbon footprint by producing more renewable hydrogen and electricity, and contribute to regional economic development.”

Regional development

An economic impact study produced by the University of Montana Bureau of Business and Economic Research measured the substantial benefit to Montana in the form of jobs, income, government revenues, economic output and population.

For example, by 2028, the economic footprint of the Great Falls site is expected to support a population of 4,400 Montanans, consisting primarily of working-aged families and their children.

Montana Renewables expects the expansion to catalyze additional regional development, particularly for renewable feedstocks sourced from farms and ranches.

By driving local infrastructure development in transportation-, agricultural- and energy-related businesses similar to the Minnesota SAF Hub, Montana Renewables will create a large-scale, end-to-end SAF industry comprised of public and private partners in Montana and the Pacific Northwest.

The Montana Renewables expansion is expected to create, at its peak, 450 construction jobs and up to 40 operations jobs.

Conditional-commitment framework

The conditional commitment contemplates a loan guarantee structured in two tranches.

The first tranche of approximately $778 million is expected to close in the fourth quarter of this year, and the balance of the loan guarantee is to be disbursed through a delayed-draw construction facility from the beginning of construction in 2025 through the anticipated completion of the MaxSAF™ project in 2028.

If finalized, the loan will have a 15-year tenor and an annual interest rate at the U.S. treasury rate plus 3/8 percent when issued (currently approximately 4 3/8 percent).

Servicing of principal and interest will be deferred until MaxSAF™ is commissioned.

A $150 million equity investment will be made at the initial closing.

Retained earnings from Montana Renewables will supplement DOE funds to maintain a 55-to-45 debt-to-equity ratio during the MaxSAF™ construction sequence.

While this conditional commitment represents a significant milestone and demonstrates DOE’s intent to finance the project, certain technical, legal, environmental and financial conditions, including negotiation of definitive financing documents, must be satisfied before funding of the loan guarantee.

“Through our collaboration with the U.S. DOE, we are thrilled to continue forward on the leading edge of our nation’s sustainable aviation fuel transition,” said Calumet CEO Todd Borgmann. “This investment will allow us to leverage our first-mover advantage and unique renewable hydrogen and pretreatment technologies to transform Montana Renewables into a world-scale SAF producer. Through this conditional commitment, the U.S. is leading the world in renewable aviation, the hardest-to-abate sector in transportation, while demonstrating our country’s innovation and technical leadership. Innovation is at the heart of what we do at Calumet and we are honored that Montana Renewables can help solidify our nation’s position as a global leader in the one of energy’s fastest-growing niches.”