Selected! It’s $3.4B for Newton County, TX as USA BioEnergy sites its first commercial biorefinery

February 15, 2022 |

The word is official and it’s Bon Weir, Texas. That’s going to be home to the first commercial advanced renewable fuels project of USA BioEnergy, and various authorities in Texas have put together $150 million in incentives to land the project, in the form of tax abatements. 

“Our investment in Newton County will exceed $3.4 Billion and provide significant employment opportunities,” said USA BioEnergy CEO Nick Andrews. The company expects project completion in late 2025.

Ultimately, the company aims to delivering over 100M gallons of sustainable aviation fuel into LAX annually. They will achieve this by capturing CO2 as part of our process then sequester it in permanent geologic storage deep underground. This gives them, the company relates, “ he lowest carbon intensity score in the industry. We do this as part of our mission to achieve our environmental, social and corporate governance goals and we strive to meet them globally to achieve a better and more sustainable future for all” stated Nick Andrews, CEO, USA BioEnergy.

The project

USA BioEnergy’s subsidiary Texas Renewable Fuels will convert 1 million green tons of wood waste into 34 million gallons per year of renewable transportation fuel. Future expansion will double the plant’s production capacity to 68M gallons annually. 

The company has secured fuel offtake agreements with a major trading and logistics company and one of the world’s premier airlines and will announce its partners in greater detail in the coming months. The biorefinery’s demand for wood waste will infuse the forestry industry in the Southeast Texas region with stable and significant long-term revenue. 

The USA BioEnergy backstory

As we observed in the Digest some time ago, “Perhaps the most intriguing company we’ve seen of late is USA Bioenergy, which has racked up agreements providing access to over 2 million tons annually of renewable and sustainable feedstocks in Oregon, Arkansas, and Arizona. Upon completion of its project plan, the company aims to produce an estimated 4,000 barrels daily of premium renewable fuels (approximately 60 million gal/yr),and they have the option of nearly tripling their production in Arkansas, which would bring total production volumes in the area of 140 million gallons annually with our current feedstock suppliers. It’s ambitious.  it takes 78 semi truckloads a day, ten hours a day, running six days a week to feed a 750 ton gasifier.”

The projects will use biomass gasification to convert the biomass into a hydrogen and CO-rich synthesis gas. The syngas is processed via Fischer Tropsch catalytic conversion to produce a light synthetic crude oil. This light crude is then upgraded using conventional equipment from well-known process technology providers in the oil and gas sector.

The rationale

As we reported in 2019, so it’s true today. “we are now seeing project flow projecting a sustainable $7.63 price for renewable diesel in the California market, where the Low Carbon Fuel Standard stacks on top of the RIN values from the federal Renewable Fuel Standard. That’s market value, not subsidy. Though some die-hards might still insist that renewable fuels should only be sold based on energy value, not on market value, as in for example the markets which Californians freely established for themselves with the Low Carbon Fuel Standard, and in which any fuel producer can avoid carbon taxes and no one is guaranteed a subsidy. Yes, Californians have different standards for fuels than other states. But then again, some people drink bottled water at $6 a gallon and some drink tap water for pennies. Up to you — that’s how markets work.”

Bon Weir?

The company has been looking around. They’ve looked at places like Yell County, Arkansas, Maricopa County, Arizona, and even up in scenic Lane County, Oregon.

Digest readers who spotted the Grateful Dead on the cover of CIRCULAR last month may be thinking of Grateful Dead guitarist Bob Weir, but this is Bon Weir, founded by Bob Weir and his sideman B. F. Bonner — but not that Bob Weir,. This was the Texas lumber tycoon who was producing as much as 20,000 feet of yellow pine at this location at its peak, before World War Two. Weir was a fixture in swanky Houston circles back then, such as the Houston Country Club where George Bush and james Baker III first became acquainted over the snappy tennis courts there — his legacy is felt less in Houston nowadays and more in the immense reserves of loblolly pine that were planted by his workers — amidst the yellow pine, magnolias and black cherry that traditionally formed the East Texas woods. 

Those who’ve seen a lot of John Wayne films have an image of Texas from the south and west, the dry vistas and the big valleys, but East Texas is nothing like that. It’s home to the Piney Woods, the Big Thicket. The railroad boom brought the lumbermen, providing everything from railroad ties to lumber for home and business construction. Demand was epic, prices were pretty good, the workers could be rough, but it was good business, and the towns did well. At one point lumber was the biggest industry in the Lone Star State, and timber baron John Henry Kirby was nicknamed “Prince of Pines”. The Great Depression, over-harvesting and the shift to cleared fields for oil wells — all of that combined to sink the ,lumber industry into a funk from which the counties have struggled over the years to recover.

The legacy is pretty awesome. Not only the existing lumber assets, but a motivated workforce. Silsbee, TX home of Gevo’s revolutionary hydrocarbon business, got its start as a lumber processing towns.

Bon Weir? That’s Piney Woods country, more or less, and home to a pretty tremendous set of assets — one of the reasons there’s a Southern Forest Products sawmill near the town, producing decking and timbers. The rail line goes back more than a century and is now operated by BNSF, and it’s the last stop out of Texas en route for Louisiana over the Sabine River, or the first stop in Texas if you look at it that way.

Reaction from the stakeholders

“We are excited that USA BioEnergy has chosen East Texas as the home for their new advanced biorefinery,” said Governor Greg Abbott. “This investment will further cement Texas as an innovative energy leader and will bring unprecedented economic opportunities to Bon Weir and Newton County. Thank you to USA BioEnergy for selecting Newton County for this incredible project and I appreciate the hard work of our state and local partners to secure this investment. I look forward to our continued work together as we create an even brighter future for the entire Lone Star State.”

“We’ve had tremendous assistance from Economic Development in Newton County, including leadership from Judge Kenneth Weeks, Nancy Windham, President & CEO of Texas Forest Country Partnership, Don Iles with Sabine River Authority of Texas, Michelle Barrow, Superintendent Newton ISD, Rob Hughes, Executive Director, Texas Forestry Association and many others.” said CEO Nick Andrews.

“USA BioEnergy is committed to delivering over 100M gallons of sustainable aviation fuel into LAX annually. Airlines using our fuel will eliminate over 50M metric tons of greenhouse gas emissions over a 20-year period. We achieve this by capturing CO2 which is sequestered in permanent geologic storage giving us the lowest carbon intensity score in the industry,” Andrews added.

“It is with great pleasure and enthusiasm that we welcome Texas Renewable Fuels to Newton County. The announcement of this $1.7 billion project brings news of 142 new jobs at completion, an estimated 585 direct construction and related workers’ jobs during construction with $877 million in direct revenues for construction related companies. In total, the project supports an estimated $1.2 billion in gross area product or economic activity during construction. Texas Renewable Fuels will bring substantial improvement in the quality of life for the residents of Newton County. Working with CEO, Nick Andrews, and the leadership team this past year has been a great pleasure. We also want to thank all the partners and supporters of this project to Newton County. We especially want to thank Governor Greg Abbott and his team for all the support and programs to solidify their decision for Newton County.” – Kenneth Weeks, Newton County Judge.

‘I would like to express my appreciation to Texas Renewable Fuels for selecting Newton County to build a new manufacturing facility which will provide and support the growing market for sustainable and renewable fuels. The economic impact of this project will benefit the community, local businesses and grow our local and state economic output.’ Robert L. Nichols, State Senator, Senate District 3.

James White, State Representative, House District 19, in support of the project, stated “Newton County is a phenomenal place that is poised for economic expansion and growth. I am very excited about Texas Renewable Fuels selecting a site in Newton County which will increase local prosperity in rural Deep East Texas. I support the creation of jobs and the diversification of our nation’s energy portfolio. Texas Renewable Fuels will create 142 jobs at completion and provide additional opportunities for Newton County by providing opportunity through cutting-edge science, new technology and a market for our wood fiber.”

“Newton Independent School District is excited about the announcement by Texas Renewable Fuels, who will be locating an advanced biorefinery within the boundaries of Newton ISD. Newton ISD participated in a Chapter 313 incentive, which temporarily limits a property’s appraised value to encourage business investments within school district borders. Texas Renewable Fuels has agreed to create 142 permanent, full-time jobs. The project will bring industry to the Newton area, an enhancement towards the education of our youth and the quality of life of our current and future workforce.” – Michelle Barrow, Newton Independent School District Superintendent.

“The Sabine River Authority of Texas is excited by the announcement that Texas Renewable Fuels will be locating an advanced biorefinery in Newton County. The project will promote economic development and generate life changing opportunities for residents of Newton County and the surrounding East Texas region.”  – David Montagne, Executive Vice-President, and General Manager of The Sabine River Authority of Texas.

“The Texas Forestry Association (“TFA”) is very excited and supportive of the Texas Renewable Fuels announcement to locate in Newton County. The TFA is all about clean, healthy, and productive forest ecosystems and this project supports those needs. This new market option would increase the resiliency of our intricate supply chain. By providing “green” market solutions for our forest stewards, forest landowners will more likely keep their property as healthy Texas forests!” – Rob Hughes, Executive Director, Texas Forestry Association. 

“The Texas Forest Country Partnership congratulates Texas Renewable Fuels and Newton County on the announcement of a $1.7 billion advanced biorefinery plant in Bon Wier. The addition of the new business and facility will supply the growing market for sustainable and renewable fuels, create 142 new jobs at completion and generate an estimated direct construction payroll of $219 million. Thank you, CEO, Nick Andrews, and the entire leadership team for committing your support to the industry, Newton County, the Forest Country Region, and the State of Texas. It has been a privilege to work alongside TRF, multiple local, regional, and statewide entities to see this project come to fruition. A great example of how hard work and perseverance pays off.  Thank you, Governor Greg Abbott, for your support and providing a gateway to keeping Texas #1!”  – Nancy C. Windham, President & CEO, Texas Forest Country Partnership.

The Company hired Forest2Market to conduct an extensive feedstock study to confirm the volumes available and pricing projections for wood waste in the region. “Forest2Market recently completed a detailed study for USA BioEnergy on RFS certified biomass availability in the area surrounding the planned biorefinery in Bon Wier, Texas. After months of research and analysis, we concluded that there is an abundance of woody biomass feedstock supply available to support both the initial phase of the plant, as well as the company’s future expansion plans to double production.” – Larry Sullivan, Bioenergy & Biochemical Sector Sales Manager, Forest2Market. 

 “Height Capital Markets has been retained by USA BioEnergy to raise capital. We have been incredibly impressed with the management team and their level of readiness to date.” John Akridge, CEO of Height Capital Markets stated, “USA BioEnergy is striving to be the world’s leader in advanced biofuels, and Height is excited to help make this vision a reality in the marketplace.” 

USA BioEnergy is proud to work with Citigroup for permanent debt financing. “USA BioEnergy has engaged Citigroup Global Markets Inc. to act as lead underwriter for a tax-exempt private activity bond offering that will comprise the majority of the senior debt financing for the Texas Renewable Fuels project. For the past two-plus years Citigroup and USA BioEnergy have worked closely to develop an efficient and achievable plan. Citigroup is a leader in Environmental, Social and Governance (ESG) finance.” – David Livingstone, Managing Director, Citigroup.

“We’re hedging a portion of our environmental credits to provide lenders with certainty of payment. We do this as a risk mitigation measure to give comfort to our financial partners” David Prom, Chairman, USA BioEnergy.

 “Our firm works with Nick Andrews and his team on the company’s offtake agreements and governmental affairs, including federal environmental policy initiatives. USA BioEnergy is advocating for clean fuels and low carbon policies that incentivize the renewable fuels industry. USA BioEnergy is an active member of the Alternative Fuels and Chemical Coalition; a leading DC lobby that advocates for public policies to promote the development and production of alternative fuels, renewable chemicals, biobased products, and sustainable aviation fuels.”  – Mark J. Riedy, Partner Kilpatrick Townsend.

The Bottom Line

We have some unknowns left —specifics on the offtakers, all the details on all the financing will eventually be forthcoming. Biggest question will be about the viability of the system at scale — there’s little doubt that it works, but there’s operational efficiency and training a workforce to be done. And some construction to do. Now, the projects scheduled for 2025, not next week, but at this scale, time to turn on the after-burners, three years will slip by in the wink of an eye.

So, there’s more to discover and more to discuss. But this is a big one, not only a win for Texas but a win for waste woody biomass, the kind that can get exotically low carbon intensity scores. Lot of wood that goes to waste — tops, thinnings, slash, dust — now, a use has emerged. Goodbye to all that waste. 

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