Take-Off: 350 million bucks towards drop-in aviation biofuels for the California market

October 29, 2018 | Jim Lane

In California, World Energy announced a $350 million investment over the next two years to complete the conversion of its Paramount, California facility into one of the cleanest fuel refineries in the world. The project will enable World Energy Paramount to process 306 million gallons annually. The conversion to renewable jet, diesel, gasoline and propane will reduce both refinery and fuel emissions while supporting more than 100 advanced, green economy jobs.

“This project will transform the Paramount facility into California’s most important hub for the production and blending of advanced renewable fuels,” said Bryan Sherbacow, Chief Commercial Officer of World Energy. “This investment will better enable us to deliver much needed low-carbon solutions to our customers. Importantly, with 150 million gallons of annual renewable jet production capacity, World Energy will be able to help the commercial aviation industry combat its greenhouse gas emissions.”

In California, demand for renewable diesel in the state makes up for about half of the country’s consumption, the vast majority of which is supplied by Neste’s refineries in Singapore and Europe. California’s credits generated by renewable diesel reached $91.74 per metric ton earlier this month with some analysts believing its could rise to $215 per ton by 2019. Nearly 628,000 tons of credits were generated in Q4 last year compared to around 6,000 in 2011.

2017: The Deal Catalyst

In March 2017 we reported that the California Air Resources Board approved eight new biodiesel pathways and another four for renewable diesel under the Low Carbon Fuel Standard using its CA-GREET 2.0 model. The biodiesel pathways are for tallow, soy oil and UCO feedstocks produced at Delek Renewables’ facilities in Texas and Arkansas, two for REG’s Newton, Iowa biodiesel plant using UCO and distillers corn oil, while GeoGreen Biofuels received a provisional approval for Californian UCO. Diamond Green Diesel was granted the four renewable diesel pathways for UCO, soy oil, tallow and distillers corn oil at its Louisiana facility.

California’s leading hub for advanced fuels production

The project will enable World Energy Paramount to process 306 million gallons annually. The conversion to renewable jet, diesel, gasoline and propane will reduce both refinery and fuel emissions while supporting more than 100 advanced, green economy jobs.

The big drop-in fuel capacity build up

In August we reported that Andeavor announced a project to convert the Dickinson Refinery to process 12,000 barrels per day of renewable feedstocks, including soybean oil and distillers corn oil, into renewable diesel fuel. The project is expected to be completed in late 2020 and is subject to permitting and regulatory approval. Andeavor continues to execute its strategy of reducing regulatory compliance costs through the implementation of renewable fuels technologies that are compatible with existing vehicles and infrastructure, according to their press release.

This news came on the heels of their merger agreement with Marathon Petroleum Corp. where MPC will acquire all Andeavor outstanding shares. According to their press release, “this transaction is expected to create a premier U.S. refining, marketing and midstream company, building a platform that is well-positioned for long-term growth and shareholder value creation. The transaction is expected to generate in excess of $1 billion of annual synergies within the first three years.”

In July, we reported that Red Rock Biofuels broke ground on the $320 million renewable fuels facility, a step forward towards taking woody biomass waste and converting it to an estimated 15 million gallons of jet fuel. After seven years in progress, the groundbreaking provided a monumental day for Red Rock and those who have contracts with them like Federal Express and Southwest Airlines. The Lakeview facility will be the first of its kind to utilize woody biomass for its raw materials and fuel deliveries are expected to begin by December 2019.

In May we reported that Riverside Renewables rejigged its biofuels, oil and propane plans that were rejected last year by the Port of Longview to a biofuels-only plan that would produce drop in fuels from 150 million gallons of virgin non-palm oil vegetable oils annually. The fuels would have 70% fewer GHG emissions and would therefore qualify for the Low Carbon Fuel Standards in Oregon, California and British Columbia. The $500 million facility could also co-locate with a an LPG supplier for a transfer terminal but talks haven’t been finalized.

Also in May, we reported that Fulcrum BioEnergy broke ground today for its 10 million gallon per year first commercial plant that makes jet fuel from municipal solid waste. Last September, we reported that Fulcrum is planning to develop eight of its MSW-to-biofuel facilities by 2022, including the first 11 million gallon facility that is expected be online during the second half of 2018. Those new facilities, five of which will be developed by United Airlines as part of their investment deal sealed in June 2015, will be between three and six times the size of the Reno facility.

Last December we reported that Neste’s Board of Directors has decided that Neste’s additional production capacity for renewable diesel, renewable aviation fuel and raw materials for various biochemical uses will be located in Singapore. The decision initiates technical design of the new production line, with the aim of a final investment decision by the end of 2018. If the project proceeds as planned, production at the new production line will begin by 2022 The new production line will extend Neste’s current capacity in the Singapore refinery by one million tons. The growth project includes an enhanced pre-treatment unit in preparation for the use of increasingly poor-quality waste materials.

Also in December, we reported that Ryze Renewables, which will construct its biorefinery in Storey County, Nevada. The new refinery is scheduled to open in the second quarter of 2019. Production capacity has not been confirmed, but latest reports based on permitting applications pegged the capacity at 40 million gallons per year.

In March 2017, we reported that the Diamond Green Diesel facility in Norco will expand its annual production capacity of renewable diesel from 10,000 barrels per day to 18,000 bpd (275 million gallons per year), using Honeywell UOP’s Ecofining process technology. We originally reported that the project, which came to light in August 2016, as a project scheduled for completion in the fourth quarter of 2017, with production expected to ramp-up in the first quarter of 2018. Now, Diamond Green Diesel plans to complete the expansion in the second quarter of 2018.

Credit California’s Low Carbon Fuel Standard

“The environmental state policies we have written are working and have paved the way for these significant investments in our communities,” said Assembly Speaker Anthony Rendon. “World Energy is demonstrating the economic potential of renewable fuels for California.”

Gene Gebolys, Chief Executive Officer of Boston based World Energy Paramount said, “Today, we are making significant investments in California that will allow us to create more local construction and full-time jobs. This facility is a direct and tangible result of environmental policies passed by the California State Legislature.”

The AltAir / World Energy backstory

In January 2016 we reported that the Department of the Navy obtained 77.66 million gallons of cost-competitive, drop-in biofuels blends in support of the launch of the Great Green Fleet, which will officially debut January 20th in San Diego at a launch ceremony that attracted US Secretary of the Navy Ray Mabus and US Secretary of Agriculture Tom Vilsack. The fuel provided meets the F-76 marine diesel specification — somewhat different and more complex than conventional diesel because of the at-sea requirement for fuels with a higher flash point. The price for the fuel to the DLA is $2.05 per gallon. So, yes, renewable fuel fans, the Navy will be running on the fuel that Islamic State can’t make or seize. It’s cost-competitive, drop-in, non-food, next-gen, advanced renewable fuel. And this buy was from AltAir.

We reported in January on a bit of biofuels from the bush, poured into and powering one of those Flying Kangaroos, and you have the latest news out of Australia, and a beauty if you happen to barrack for aviation biofuels. The world’s first dedicated biofuel flight between the United States and Australia, QF96 from Los Angeles to Melbourne. The trans-Pacific 15 hour flight operated with approximately 24,000kg of blended biofuel, saving 18,000kg in carbon emissions. Qantas will use biofuel processed from Brassica Carinata, a non-food, industrial type of mustard seed, developed by Canadian-based agricultural-technology company, Agrisoma Biosciences (Agrisoma). Across its lifecycle, using Carinata-derived biofuel can reduce carbon emissions by eighty percent compared to traditional jet fuel.

World Energy (then AltAir), which converted the Carinata oil into jet fuel, operates the world’s first commercial-scale renewable jet fuel plant at the AltAir Paramount refinery in Paramount, Calif. The plant produces 35 million gallons per year of renewable fuels, including Honeywell Green Jet Fuel, using Honeywell’s UOP Renewable Jet Fuel process, which produces fuels that are chemically identical to petroleum-based fuels. Delivery of the fuel to the aircraft is provided by supply partner World Fuel Services from Miami, Florida.

We reported in June 2015 that AltAir Fuels would begin regularly scheduled deliveries of sustainable biojet fuel to United Airlines LAX operations this year, the airline announced today. AltAir’s Paramount, California-based refinery converts sustainable feedstocks, like non-edible natural oils and agricultural wastes, into low-carbon, renewable jet fuel. This fuel is price-competitive with traditional, petroleum-based jet fuel, but achieves a 50 percent reduction in carbon dioxide emissions on a life cycle basis when compared to traditional jet fuel. Under the terms of the agreement, United purchased up to 15 million gallons of sustainable aviation biofuel from AltAir over a three-year period, with the option to purchase more.

In March 2016, we reported that United Airlines made history by becoming the first U.S. airline to begin use of commercial-scale volumes of sustainable aviation biofuel for regularly scheduled flights with the departure of United Flight 708 from Los Angeles International Airport. The launch marks a significant milestone in the commercial aviation industry by moving beyond demonstration flights and test programs to the use of advanced biofuels for United’s ongoing operations.

In May 2017 we reported that Singapore Airlines (SIA), in partnership with the Civil Aviation Authority of Singapore (CAAS), started operating a series of 12 ‘green package’ flights over a three-month period on its non-stop San Francisco-Singapore route. The first of the 12 flights, SQ31, departed San Francisco at 1121hrs (San Francisco Time) on 1 May 2017 and arrived in Singapore at 1910 hrs (Singapore Time) on 2 May with 206 passengers on board. Over the three-month period, flight SQ31 was powered by a combination of HEFA (Hydro-processed Esters and Fatty Acids), a sustainable biofuel produced from used cooking oils, and conventional jet fuel. The biofuel, produced by AltAir Fuels, will be supplied and delivered to San Francisco by SkyNRG in collaboration with North American Fuel Corporation (NAFCO), a wholly owned subsidiary of China Aviation Oil (Singapore), and EPIC Fuels.

In April 2017 we reported that Air Canada is participating in the Civil Aviation Alternate Fuel Contrail and Emissions Research project, a research project led by the National Research Council of Canada to test the environmental benefits of biofuel use on contrails.

This project uses advanced sensing equipment mounted on a research aircraft operated by the NRC to measure the impact of biofuel blends on contrail formation by aircraft on five biofuel flights operated by Air Canada between Montreal and Toronto in the coming days weather permitting. During these flights the National Research Council of Canada will trail the Air Canada aircraft with a modified T-33 research jet to sample and test the contrail biofuel emissions. The sustainable biofuel is produced by AltAir Fuels from used cooking oil and supplied by SkyNRG.

World Energy (AltAir): The Multi-Slide Guide

Renewable jet fuel, competitive cost, at scale: The Digest’s Multi-Slide Guide to World Energy (AltAir)

World Energy on the move

Back in March, Delek US Holdings signed and closed the sale of AltAir Paramount, LLC and Delek’s Paramount, California refining and pipeline assets to an affiliate of Boston based World Energy, LLC. The sale includes all of Delek’s membership interests in AltAir Paramount, LLC. Based on Delek’s ownership interest in AltAir Paramount, LLC the transaction was expected to result in proceeds to Delek of approximately $72.0 million, taking into consideration estimated working capital, Delek US’ portion of the biodiesel tax credit for 2017, and deal costs.

Vandewater Capital Holdings, the lead investor and controlling shareholder of AltAir Fuels from its inception in 2013 until Delek acquired a controlling stake in October of 2015, brought AltAir from concept to a leading refinery of renewable fuels. Describing AltAir’s track record, Jason Aintabi, Vandewater’s founder, and previous Chairman and CEO of Altair, said, “We are very proud of what we were able to accomplish here. Altair is a globally recognized facility that has helped pioneer an era of impact investment in America’s energy future. Our sustainable fuels are proudly used by the Department of Defense, United Airlines, UPS as well as other prominent companies.”

World Energy is one of the largest and longest serving advanced biofuel suppliers in North America. Founded in 1998, the company operates biodiesel manufacturing plants in Houston, TX, Natchez, MS, Rome, GA, Harrisburg, PA, Hamilton, ON, a renewable diesel refinery in Paramount, CA, and distribution hubs throughout the US and Canada.