Sustainable aviation fuel can use a variety of feedstocks, from used cooking oils to oily seeds. When those feedstocks are heated under high pressure with a catalyst, the process produces hydrocarbons - the essential component in fuel. This process is called HEFA, Hydro-processed Esters and Fatty Acids. One company using this process to produce sustainable aviation fuel is Montana Renewables, based out of Great Falls, Montana, where they reconfigured equipment previously used in petroleum refining.
In part two of four, we'll be sitting down with Bruce Fleming, who serves as Executive Vice President of Calumet Specialty Products Partners and CEO of Calumet subsidiary Montana Renewables. Bruce will take us behind the scenes of the biofuel industry, discussing Montana Renewable's approach to feedstocks, infrastructure, and and other challenges to scaling SAF.
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Contact us at contact@climatenow.com
Visit our website for all of our content and sources for each episode.
Sustainable aviation fuel can use a variety of feedstocks, from used cooking oils to oily seeds. When those feedstocks are heated under high pressure with a catalyst, the process produces hydrocarbons - the essential component in fuel. This process is called HEFA, Hydro-processed Esters and Fatty Acids. One company using this process to produce sustainable aviation fuel is Montana Renewables, based out of Great Falls, Montana, where they reconfigured equipment previously used in petroleum refining.
In part two of four, we'll be sitting down with Bruce Fleming, who serves as Executive Vice President of Calumet Specialty Products Partners and CEO of Calumet subsidiary Montana Renewables. Bruce will take us behind the scenes of the biofuel industry, discussing Montana Renewable's approach to feedstocks, infrastructure, and and other challenges to scaling SAF.
Follow us on Twitter, LinkedIn, Facebook, and Instagram.
Contact us at contact@climatenow.com
Visit our website for all of our content and sources for each episode.
James Lawler: [00:00:00] Welcome to Climate Now, I'm James Lawler. Today's episode is the second in our series on sustainable aviation fuel, or SAF. In our last episode, we explored the different pathways to developing sustainable aviation fuels, and the complex logistics associated with bringing them to market at any scale. Today, I'll be speaking with one commercial producer of SAF, Montana Renewables, which is using the HEFA process, which again stands for Hydro Process Esters and Fatty Acids, a process that involves refining and adding hydrogen to waste oils, such as used cooking oils, tallows, soybean oils, et cetera. Today, the HEFA process is the only process producing commercially available sustainable aviation fuel, but has similar logistical challenges to other SAF pathways, including obtaining feedstocks and getting final products to market. So, I wanted to understand how Montana Renewables is approaching these challenges.
Today we are taking you to Great Falls, Montana, home to Montana Renewables. Montana Renewables was founded in 2021 [00:01:00] when Calumet Specialty Products Partners purchased a century old refinery in Great Falls for the purpose of transforming it into a refinery for making renewable fuels. Now a subsidiary of Calumet, Montana Renewables started operating in late 2022 and claims to be, today, the Western Hemisphere's largest maker of sustainable aviation fuel, producing, it says, 30 million gallons of SAF per year, with the ability to increase that output significantly over the next two to three years. The company produces even more renewable diesel, about 200 million gallons each year, as well as hydrogen. Crucial to Montana Renewable's success is its location near abundant renewable feedstocks in Montana and Canada for refining into sustainable fuels, especially crops with oily seeds, such as camelina, and even the fat rendered from meatpacking plants. Montana Renewables sustainable fuel business works with producers in the region, providing a financial boost to the farmers and others who sell their feedstocks to the company. A recent University of Montana economic analysis [00:02:00] has determined that Montana Renewables presence in the state has created job opportunities for 4,000 people. My guest today, Bruce Fleming, is CEO of Montana Renewables. Bruce, it's great to have you on today.
Bruce Fleming: Hi James, pleasure.
James Lawler: I wonder if you could start by just telling us a little bit about your background.
Bruce Fleming: Yeah, you bet. So, my background is, started off as a chemical engineer, actually working on alcohol-to-fuels conversion processes for Mobil, who commercialized one in New Zealand a long time ago. So, you know, there's a lot of, a lot of legs, a lot of history in, in renewables that sometimes people aren't fully aware of. So, I'm harnessing some of that on behalf of Montana Renewables; we happen to be the Western hemisphere's largest sustainable aviation fuel producer, which sounds great. That says almost nothing because the, the amount of SAF being produced in the world is a tiny, tiny drop in the bucket.
James Lawler: Just to kind of ground us in reality as we, as we have this conversation, by my research, it looks like globally we use something between [00:03:00] 80 and 100 billion gallons of jet fuel per year. How many gallons per year, today, of SAF is being produced?
Bruce Fleming: So, so last year the world produced maybe 200 million gallons. Million. And if you want 80 billion, somebody with a calculator is pretty quickly going to figure out we're at a 10th of a percent or less. We're seeking 80 billion replacement if you want to decarbonize aviation.
James Lawler: Bruce noted that Montana Renewables currently produces 30 million gallons of SAF per year, or 15 percent of the SAF produced worldwide. He said that in addition to the 30 million gallons of SAF, the Montana facility produces about 200 million gallons of renewable diesel fuel each year.
Why did Calumet purchase this refinery? Why this location versus some other refinery to do what you're doing?
Bruce Fleming: This was an opportunity. There was a Canadian upstream company, a crude oil producing company, which owned this small refinery in Great Falls. They decided in their business model that didn't actually make [00:04:00] sense for them to continue and it came up for sale, so we bought it. We've owned it about a dozen years at this point, and we saw a lot of potential in a couple of different directions. And so in, in two waves, and there's a third wave coming, we've put, rounding off, half a billion dollars in twice already. We did it in 2016. We did it again in the last couple of years. We're going to do it again. It's a very, very compelling platform. And when somebody tries to find Great Falls, Montana, on a map, you're going to start wondering, what did we see? And in the renewable fuel space and in the SAF space, what we saw was proximity to feedstock. Transportation costs are enormous, feedstock access is a problem, for some, and you know, it's, it's growing in our backyard quite literally. Second thing we saw was we are adjacent, I mean physically adjacent, to some of the best carbon preference product markets in the world, like British Columbia, Canada.
James Lawler: What do you mean by that?
Bruce Fleming: So, what's a [00:05:00] carbon preference market? People have heard of things like low carbon fuel standard, renewable volume obligations, you know, blending mandates. The four West coast states and provinces in North America each have their own rule requiring continual improvement on carbon reduction in the transportation sector, continuous improvement. And, it ratchets down. And it's working. You know, California started this, British Columbia was next, Oregon and Washington. Now all of Canada has the same rule. Other U.S. states are opting in, so there's a lot going on and it's going on fast.
James Lawler: Bruce was referring to mandates like California's Low Carbon Fuel Standard, or LCFS. Montana Renewable's location in Western North America is ideal, he said, since it is geographically close to Canadian provinces and to California, Minnesota, and other U.S. states that offer tax credits and other financial incentives to companies that produce or use sustainable fuels.
Bruce Fleming: We had a whole lot of things going for us. We had a [00:06:00] hundred-year-old site with a, with a trained, experienced, and qualified workforce in place. We took existing assets that we knew everything about from the standpoint of inspection or maintenance, or just our stewardship.
James Lawler: So, let's dive into what is being produced at the refinery today. What are you guys making?
Bruce Fleming: So, let me start with the few things that we don't talk a lot about. We make renewable hydrogen. We make renewable natural gas. We make renewable propane. We make renewable NAFTA, which is a drop-in gasoline blending component at the moment, but, that is also the source of all of the world's plastics, ultimately. So, you know, if you want renewable plastics, the road there is going to go through renewable NAFTA. We make that. Then we come to the workhorse, which is 95 percent of what we produce: SAF and renewable diesel. Right now, it's mostly diesel. We're developing an investment that will tilt that the other way. It'll be mostly SAF.
James Lawler: The raw materials or feedstocks used in the HEFA [00:07:00] process are oil based and can include used cooking oils, animal fats, and even oily seeds. To create the fuel, the feedstocks are heated under high pressure and temperature, along with a catalyst that hydrogenates them, removing their oxygen atoms and converting their double bonds to single bonds, which convert the feedstocks into hydrocarbons. Further processing yields hydrocarbons such as diesel and jet fuel. I asked Bruce what feedstocks Montana Renewables uses to make SAF and other products.
Bruce Fleming: What is the feedstock for these things? Triglycerides. It's a mouthful. But it's a naturally occurring oily molecule. We get ours from any seed crop. We run camelina oil. We run canola oil. We have run soybean oil; it's not normally in our economic solution. And, you also get it from animal products. So, it's, it is the last recycled waste material from a meatpacking plant. It's called rendered, rendered product, so it's tallows. You know, that's a solid waste. We run that. [00:08:00] We don't care. We can run any of these things, we're happy to run any of them. Used cooking oil is oil that was already used once and we're going to use it again, so there's a real circular economy here. From a carbon point of view, this is directionally carbon neutral life cycle. So, the modelers will quantify that, and they'll do it very carefully. They'll get into things like whether the farmer used fertilizer, and if he did, how was the fertilizer made, and did the making of the fertilizer use fossil energy. Some of our feedstocks are calculated in these detailed models at up to an 80 percent reduction from their fossil equivalents. It's, it's a pretty exciting thing to be part of. And here's the kicker. We had everything going our way, like I said, we had the workforce, we had the assets that we needed, and all of these feedstocks grow in our backyard. And what I mean by that is they were all in commerce anyway; we just tapped into something that was existing and that was mutually beneficial. Farmers get a better price from us. We get a lower [00:09:00] price than importing these same feedstocks from far away. And, when you do both of those on a short supply chain, you have cut down on the ton miles traveled over roads or over rail. So, this is very, very synergistic. It's, I like to think of it as circular. It's substantially carbon neutral. This is where the energy transition wants to head.
James Lawler: Talk about the logistics of this site, because as I understand, that's another critical feature. If you're going to produce SAF, you have to figure out a way to get it into blending facilities and then get it actually into airports to planes and you got to use existing infrastructure to do those things.
Bruce Fleming: At this time, all of the renewable feeds and products are moving by rail. We're fortunate in that regard: Great Falls, Montana, for historical reasons, was a rail crossroads. It's one of the major nodes on the Burlington Northern system. So, we've got excellent access to a very, very large adjacent rail capability. We have a direct link into our refinery site. I think we've, [00:10:00] we're probably about five tracks wide and we can easily turn two or three times the number of cars that we need. That's unusual, so that's another lucky accident specific to us. Most petroleum refineries are pipeline connected, not rail. Most would have to spend a lot of money replicating what we had available to us. We feel pretty good about that. Feeds tend to be gathered locally and locally means within 500 miles, so depending on sort of scheduling efficiencies of the railroad itself, that's one or two or three days away. That's quite close. That gives us a lot of flexibility. Outbound product, same thing. We've had as much as 50 percent of our product go back to Canada. If you pull out your map of North America, Montana shares a very, very long land border with Canada. So, some good high speed highway connections as well as the rail. So, you know, there's a lot we can do with our position. That all revolves around the fact that it was the West [00:11:00] coast that elected to lead the way on the LCFS and carbon reduction initiatives. So, our natural market is exactly where we sit.
James Lawler: Right. Bruce, Montana Renewables has invested about a billion dollars in the Great Falls facility over the past several years. What was required to convert this plant from refining fossil fuels into a plant for making lower carbon fuels?
Bruce Fleming: The half billion or so that we put in in 2016 and a similar amount in the last couple of years went to a lot of different things.
James Lawler: Okay.
Bruce Fleming: What we had to do to make RD and SAF was almost literally as simple as taking one of our existing refinery assets, changing the catalyst that it holds so that we could change the feedstock to renewable. We, we, we had to do very, very little beyond that, so that particular refinery unit, which we had earlier constructed, luckily had all of the right kind of chemical engineering attributes to be perfect for renewable feedstock. So we [00:12:00] simply switched feedstock. Took very little money to do it. We then expanded that base. So building the renewable hydrogen as an example, you know, that was a discretionary decision, but it had a very, very high economic driver. And, we really like the renewable hydrogen nature. The fact that we have got this, this closed loop, where the hydrogen is ultimately made from our same feedstock that comes from plants or animal waste.
James Lawler: One of the things I find really interesting about what you've created at the site is this ability to use a lot of different feedstocks. It seems like that's valuable in a couple of ways. Number one, that it provides some resiliency to pricing. So, if you have one feedstock that's more expensive, you could use more of another to produce your product. What is the main value of having this ability to use all these feedstocks? And then, what's the logistical challenge to make that possible?
Bruce Fleming: Your first driver, which is the flexibility to follow market price efficiencies, is really the root [00:13:00] consideration. The second one is, right now in the world, 80 percent of the feedstocks that go into anybody's biodiesel or renewable diesel are alternatively food. In other words, 80 percent of them are variations on vegetable oils. That's going to change. You know, the government policy and rules are clearly shaping up to try to separate food from fuel.
James Lawler: Bruce refers here to what's known as the food versus fuel conflict over whether farmland should be used to grow feedstock crops for biofuels rather than food crops. If farmers find that biofuel crops are more profitable, food crops could conceivably become less available.
Bruce Fleming: That sets up the third driver, which is we wanted to make sure that we could run the feedstocks of the future. Nobody's quite sure what those will be, but you'll hear people mention things like camelina, jatropha, pennycress. We think we're the first and we may be the only---we have run camelina oil. Camelina is a particularly interesting story, which I'd like to get into with you when we reach that point. But, you know, the feedstock [00:14:00] flexibility was intentional because we expect these markets to evolve pretty fast, expect rules to change, we expect economic drivers to change. So, in terms of our feedstocks, one of the reasons you have people looking at a lot of alternatives to vegetable oils and animal wastes is the idea that there won't be enough of those to replace all of the crude oil. That idea is almost certainly correct in the long run.
James Lawler: Right.
Bruce Fleming: If you want to replace all of the crude oil, there's not enough of anything. There is no named technology that will lift that challenge. Therefore, you need a little bit of everything. They all come in.
James Lawler: So, it seems like a very good choice to, if you're, if you're setting up a HEFA facility, to, to be very thoughtful about some of these feedstocks of the future, as, as you said.
Bruce Fleming: Yeah. And for our, our growing latitude, we like camelina. If you, if you try to find some of these color-coded maps of where things grow, it's going to generally grow [00:15:00] sort of along the South side of the U.S.-Canadian border. The farmers use it anyway. I mean, they're, they're using it to hold down the soil in the winter, they use it to maintain soil quality by switch crop and pulse crop applications, but they weren't harvesting the seeds. They were using the plant for the soil, then they were plowing it back under, but the seeds now have cash value because you can squeeze them for the oil and I will pay you for it. So that oil is beginning to come to market and it's specifically coming to us. What's important about that is on three levels. A, it's not food. So, to the extent that we are ever headed for food versus fuel, we're going to end around that, that potential policy concern. Number two, it's not competing for something else. I needed to switch the wheat crop preserve the soil conditions. I'm using camelina, but I didn't have to not plant wheat. And then the winter, it likes kind of poor-quality soils, it doesn't mind being arid, so it, [00:16:00] it does well in the winter when it's not raining. And, therefore, no indirect land use charge, if you're familiar with the modeling. And that's a big deal because it's got half the carbon intensity of the best vegetable oil.
James Lawler: I understand that indirect land use changes are factored in when calculating a fuel's carbon intensity. Could you explain what that means?
Bruce Fleming: So, let's start in the acreage. I'm going to grow a plant or an animal from which later I'm going to have a feedstock for somebody like Montana Renewables. In growing the plant, I tied up land, and I performed activities, and the activities would be things like planting, plowing, harvesting. So, the, the model tries to take into account all of these indirect energy uses. The real kicker is, what was the land doing right before that? If the land was idle and you plowed it up, you might release back into the environment, things that had previously been sequestered just before you touched it. If the land was not idle, but was already in a, [00:17:00] another productive commercial use, in other words, I'm, I'm growing a different crop and I switched. And then the third category is, if I had to clear the land in order to get to it, that's the worst one because you're actually cutting down foliage and the disaster cases, deforesting a rainforest to plant a rubber plantation or to plant palm oil trees. How you use the land, what the land was doing before matter a great deal. This all goes into the calculations. So basically, for camelina, we're using idle land; it wasn't doing anything before because it was winter and it was going to sit there bare. And so, there's not a, there's not a charge for basically degrading, if you want to think of it that way. We didn't clear any forest in order to get the land to do the planting. So, you know, all of this is in the, the LCFS models. You know, we, we really like camelina for this reason: not food, super good carbon intensity leverage because of not competing for land use, and fairly [00:18:00] prolific in terms of the amount of oil in each seed, very high oil content, very oily seed.
James Lawler: So, Bruce, in your facility at Great Falls, you have a strategic plan, I guess you'd call it, that is, that you've named your MaxSAF, meaning Maximum Sustainable Aviation Fuel case or production case for the plant. Could you describe what that means? What does MaxSAF mean for the Great Falls facility?
Bruce Fleming: Sure. It probably means a couple of different things, and we can unpack some of this for your listeners, but the first thing is that we've, we've already run our treater up to 30 percent SAF yield. We've got it tuned for diesel, that's how we set the business up. But, we do make SAF as an intentional co-product, and the current capability is economically limited around 30 percent. So, what we've designed is by adding a second reactor and changing the catalysis around a [00:19:00] little bit, we can take that, the licensors say, to 100 percent. We think economically probably more like 85 percent, but MaxSAF means we'll have the capability to take the renewable feedstocks all the way to SAF. And, you know, that's pretty exciting. We, we talked earlier about our current permitted capacity of 230 million gallons. So, as we install the second reactor, we've got a chance to de-bottle and that can expand. So, we're going to take that also. We think the entire facility is going to be north of 300 million gallons. So, if you put those two things together, that could be all SAF. And that's huge because the, the White House's SAF Grand Challenge is they'd like to see 3 billion gallons of SAF, I realize I'm throwing a lot of numbers here, but, they'd like to see 3 billion gallons of SAF by 2030; we'll get them 10 percent of the way there pretty much now.
James Lawler: Bruce, out of curiosity, since SAF seems to have more profit potential than renewable diesel, why not pursue MaxSAF from the very beginning, instead of going to renewable [00:20:00] diesel first before SAF? Was, was, was that an economic choice?
Bruce Fleming: It's a practical juxtaposition of several things. First off, we touched on this earlier, but we had an existing facility, which took very, very little effort to switch from fossil to renewable feedstock. We're very fortunate in that regard. So, the question was on the table, whether we ought to jump to this expansion and MaxSAF from the get go. We sequenced a number of things to get where we are. We're sequencing additional things to get the SAF yield up and to get the capacity expanded. So, it's a continuous journey. In the real world, we want it to allow the possibility for the market changing around us, wanted to allow the SAF buyers to figure out what they wanted. You know, that was really all over the map for the last several years. It's becoming standardized now. You know, the, the U.S. passenger carriers, for example, have started to articulate a common [00:21:00] vision of 10 percent SAF by 2030. They wouldn't have been as aligned a few years back, and it was frankly a little hard to figure out what the customer really wanted or needed. That's all become much more clear. So, we, we feel better about having got a couple of years of learning curve under our belt in the field. We've got a very good customer and off taker and shell who, who goes onwards to the aviation industry. We like that relationship and, you know, we think we're simply building on those successes and expanding the beachhead.
James Lawler: Sustainable fuel companies like Montana Renewables have powerful financial incentives to produce fuels having low carbon intensities, or CI scores, because states with low carbon fuel standards, like California, put a cap on the carbon intensity of fuels used and give tax breaks to companies that meet those low carbon requirements. Plus, customers, including several airlines, are willing to pay a premium for low carbon sustainable aviation fuel to help them meet their emissions goals. Earlier in the conversation, Bruce alluded to the fact [00:22:00] that the feedstocks that a company uses can have a major impact on the carbon intensity of its fuel. That's because when calculating a fuel's CI score, modelers consider its entire emissions life cycle, including the CO₂ emissions that occur when the feedstock is planted, harvested, transported, and processed. As Bruce noted, the low CI scores of his feedstocks contributed to up to 80 percent lower CI than fossil aviation fuel.
Bruce Fleming: One feed class is vegetable oils, soybean oil, canola oil, et cetera. And, that's a large existing global industry. It's tied into food. And, you've got something in the zip code of half the CI of fossil materials. But you can do better. So, the next group is waste byproduct materials, and so that'll be things like corn oil from ethanol plants, tallows from the beef rendering, the waste recycling of animal protein value chain, a couple others in that class. Those are in the [00:23:00] zip code of about a 30 CI. There's more range now, so some of ours are as low as 25, some of them are as high as 35. But, now you've got, again, tremendous leverage because you've reduced the fossil equivalent by, you know, 65 to 75 percent. And then you come to camelina, which we're, we're very bullish on the future of it, it's present in the market today in very small quantities, but that's a non-food seed oil, and it's a very rich one. So, you get a, you get leverage on, on the carbon models, the CI calculation models, a couple of ways. And then the final comment: so, then we, we can take all of those numbers and make them better by four to six CI points because of our renewable hydrogen. We can make them better yet by working upon other site utilities. So, any operating site is also going to have requirements for electrical power, steam, you know, odd bits of other things that represent energy [00:24:00] consumption, and as soon as you go to energy consumption, you're going the wrong way on your CI score; you're adding to it. So, we've got a cogeneration facility that we're going to install as part of the MaxSAF expansion. We think that takes 14 CI points off of all of our feeds. So, anybody can do these things, and over time, we think everybody is going to do these things. Once you launch a new industry, which is, which is what the U.S. has done---we've, we've launched a whole new industry here in the last 10 years, the HEPA processing---then you start to make it more efficient and effective, and it just keeps getting better.
James Lawler: Bruce, I'm curious how Montana Renewables fits into Calumet's larger strategy. Does, does the company plan to continue owning and operating this facility, or perhaps instead just to sell it?
Bruce Fleming: Calumet is a serial entrepreneur with a hundred-year history. What we like about this business is we're early, we're helping shape it, we may be the strongest competitor. We have several analyses that point to that, [00:25:00] and that's just an accident of location. If I have the lowest shipping costs, I'm ahead of everybody else on that metric and so on around the table. So, when you think about it that way, you know, we feel very good about our position. However, we're also a small business. And one of our publicly communicated goals is we would be open to the right kind of partnering. So, if I had a complimentary partner who brought something organizationally that we lack, and that might be that they had a whole lot of people and a lot of technical expertise, and we could move along to this CI improvement learning curve faster with that help, that would be real value. You know, we're interested in partnering. We're probably not interested in selling the company, but, on the other hand, we're entrepreneurs and if somebody makes us an offer we can't refuse, we have to look at that.
James Lawler: Bruce, have you done any studies of the economic impact of a producer like Montana Renewables in the state of Montana? Has anyone looked into [00:26:00] that?
Bruce Fleming: We have. You know, that's very interesting from several respects. The University of Montana has an economic model. This is, this is an independent group. The government uses this model for, for studies if they need to know, you know, the interrelationship among industry and economy and tax base and whether that's good for the state. What they found was 4,000 people can live in Montana because we are here doing this, and that's a big deal in the intermountain region. You know, there's, there's been slow, slow population decline or at best stagnation. It's hard to create opportunities. We've got a very high-tech opportunity here. Our workforce is technically trained, the pay scales are high, the benefits are good. The mission is absolutely aligned with the energy transition that people talk about a great deal, and, if we can go a little further, if we can attract in [00:27:00] this agricultural processing capability, we keep going, you know, we build more on that.
James Lawler: Yeah. So, thank you.
Bruce Fleming: Oh, you bet. We, we appreciate the opportunity to, to tell the story and spread the word. You know, we need a lot of people doing a lot of things to drive an energy transition better, to drive it faster, and, you know, the more people that realize that there is something they can contribute because they heard something on your podcast and they see where they could make a difference, that's good for everybody.
James Lawler: That's it for today's episode. The third in our series on sustainable aviation fuel will be with Stephane Thion, vice president of commercial for LanzaJet, a technology company with a focus on the alcohol-to-jet SAF production pathway. Hope you'll join us for the next conversation.