Montana Renewables renegotiates DOE loan as SAF project capital costs fall

Montana Renewables has not lost access to a federal loan earmarked for expanding its Great Falls, Montana, renewable fuels plant, said CEO Bruce Fleming.

Instead, the company has redesigned the project to need far less capital than originally planned by cutting costs by 85%, a shift that lets the biofuel producer rely mainly on cash flow as it looks to capture a recovering renewable diesel and sustainable aviation fuel market.

US prices of sustainable aviation fuel have been on the upswing. As of Sept. 2, so far in the third quarter of 2026, the price of California SAF is averaging $10.49/gal including credits. With the credits detached the price is $5.71/gal, according to assessments from Platts, part of S&P Global Energy.

Also, the spread between Los Angeles SAF and Los Angeles jet has narrowed with the rising SAF price and dipping jet fuel price to average $3.79/gal in Q3, up about 16% from Q1 as military action in Iran has increased demand and weakened supply delivery logistics for the fuel.

Fleming said in a Sept. 1 interview that no loan was withdrawn by either the company or the US Department of Energy's Loan Programs Office, pushing back on market speculation that policy shifts under the Trump administration had curtailed the financing.

"Nobody withdrew anything. We requested a change and the change was approved," Fleming said.

Montana Renewables produces sustainable aviation fuel, renewable diesel, renewable hydrogen and renewable naphtha at Great Falls, Montana, plus roughly 20 million gallons/year of renewable propane and butane, previously flared, now captured as a salable product.

Feedstocks, including tallow, distillers' corn oil, canola oil, used cooking oil and camelina oil are readily available near the site and will total about 2 billion pounds annually once the expansion is complete, Fleming said.

Loan mechanics

The DOE's Loan Programs Office issued Montana Renewables a conditional loan commitment of $1.44 billion in October 2024 under the Biden administration, Fleming said. The company drew $782 million early in 2026 to fund a project phase that was already built out, leaving $658 million in what Fleming called "dry powder" earmarked for a second expansion phase.

Rather than draw down the full remaining balance, Montana Renewables asked the DOE to let it adopt an alternative engineering approach to the expansion, a solution the company has been developing since first engaging with the department in 2021.

"We think we have come up with a better way because we've been working on this for years," Fleming said the company told DOE more than a year ago. The department agreed in writing to allow the change, though rewriting the underlying loan documents took additional administrative time, he said.

Capital efficiency

Under the revised plan, Fleming said the company now expects to capture 70% of the benefit of the original expansion design for about 15% of the go-forward cost.

As a result, Montana Renewables now needs only $137 million of the $658 million in remaining loan authority to complete the expansion, with the balance of project costs to be funded through company cash flow, he said.

The redesign centers on the company's MaxSAF strategy, which uses a proprietary catalyst and patent-pending polishing configuration to boost SAF yields while minimizing lower-value byproducts.

Rather than shipping a new reactor from the Gulf Coast, Montana Renewables is redeploying an existing reactor from its adjacent fossil-fuel refinery, a cheaper, faster, lower-risk approach targeting roughly 200 million gallons/year of SAF by 2028, versus original plans for 300 million gallons/year under the $1.44 billion DOE-backed project.

Fleming said the loan guarantee agreement restricts use of the funds strictly to construction at the site, operating similarly to a construction draw facility where money is disbursed as building progresses.

"We don't want to borrow more money than is required to do the mission," he said, adding that the company deliberately avoided drawing the full amount available. "It's a loan. They're going to want it back."

Output ramp-up

Current SAF output at Great Falls stands at roughly 60 million gallons/year, Fleming said, a figure expected to rise to between 80 million and 100 million gallons/year by the end of 2026 once a second SAF reactor comes online in early winter.

Output is projected to exceed 120 million gallons/year by spring 2027 leading to a roughly 200 million gallon/year 2028 target, alongside a rise in total plant throughput to 17,000 b/d from about 13,000 b/d currently, he said. The Great Falls facility also produces asphalt.

Montana Renewables, one of the few US SAF producers, supplies the fuel to Delta Air Lines via a Shell Aviation offtake agreement, delivering up to 30 million gallons/year to Minneapolis-St. Paul International Airport. The company made its first commercial North American camelina-based SAF delivery there in 2024, and it holds additional evergreen SAF contracts with undisclosed airlines and airports at premiums of $1-2/gallon over renewable diesel, Fleming said.

As of Sept. 2, Illinois SAF prices are averaging $10.91/gal so far in Q3, up 25% from Q1, encouraged by the state's SAF $1.50/gal credit. Minnesota recently implemented a $1.50/gal credit of its own.

Policy backdrop

The recalibration comes as the broader biofuels sector adjusts to policy support measures, including small refinery exemptions under the US Environmental Protection Agency's Renewable Fuel Standard program, which have drawn criticism from biofuels producers. Montana Renewables' Great Falls site is too small to expect a significant benefit from such exemptions, though Calumet Specialty Products Partners' Louisiana refineries do qualify, Fleming said.

Fleming characterized the capital-efficient redesign as a product of the company's willingness to revisit engineering assumptions built up over years of engagement with federal regulators. "It's our willingness to explore the possibilities and being creative enough to find something that made sense," he said.