Calumet, Inc. announced that the US Department of Energy (DOE) Loan Programs Office (LPO) 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. Montana Renewables is an unrestricted subsidiary of Calumet.

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 (RD).

MRL 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.

An economic impact study produced by the University of Montana Bureau of Business and Economic Research (BBER) 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.

MRL 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, MRL will create a large-scale, end-to-end SAF industry comprising public and private partners in Montana and the Pacific Northwest.

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

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 US Treasury rate plus 3/8% when issued (currently approximately 4 3/8%). 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 MRL will supplement DOE funds to maintain a 55/45 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.

Calument acquired the Connacher Oil and Gas petroleum refinery in Great Falls, Montana in 2012; the refinery originally was built in 1922 and run by Home Oil and Refining Company.

In 2016, Calumet completed a $450-million project—said to be the largest capital project ever carried out in the county—that more than doubled its capacity to refine crude oil to 25,000 barrels per day. In 2023 the newly formed Montana Renewables subsidiary began full-scale production of renewable fuels at a reconfigured facility that continued to devote approximately half of its capacity to the production of crude oil-based petroleum products.