Montana Renewables slashes cost of SAF expansion in newly revised plan

Photo: Montana Renewables

Calumet Inc. announced Sept. 1 a new flight plan for its MaxSAF® expansion at its Montana Renewables subsidiary.

By repurposing proven, installed refining equipment from the adjacent Calumet Montana Refining facility, Montana Renewables expects to reach approximately 200 million gallons of annual sustainable aviation fuel (SAF) production and 17,000 barrels per day of total product sales by year-end 2028.

The total remaining project-capital spend for this expansion is $137 million, compared to the $1.2 billion megaproject contemplated in the original loan issued by the U.S. DOE through its Office of Energy Dominance Financing.

Reflecting the dramatically lower capital requirement, Montana Renewables and EDF have amended the loan guarantee agreement (LGA) originally executed in January 2025.

Phase 2 DOE funding is reduced from up to $658 million to a single, final draw of $34 million, with the balance of the expansion self-funded from Montana Renewables’ earnings.

The original agreement required the project’s full equity to be committed before Phase 2 construction.

The amended structure requires no third-party equity, thereby eliminating dilution and preserving a simple capital structure for future strategic opportunities while accelerating the benefits of increased throughput, SAF, improved yields and reduced unit costs.

The centerpiece of the revised plan is the redeployment of selected CMR assets—a hydrotreater, hydrogen plant and naphtha splitter—to Montana Renewables under a long-term lease.

The tied-in hydrotreater creates a proprietary dual reactor system that runs in a “polishing” service rather than the industry-standard “cracking” service, delivering competitively advantaged SAF yields while lowering byproduct production and reducing yield loss.

Several additional modular components, including a third renewable fuels reactor currently offsite, provide the ability to expand capacity beyond 200 million gallons over time. 

Rather than a single large construction project, the new expansion is structured as six small, controllable, quick-payback projects, each designed to increase returns and reduce construction risk.

Following constraint removal completed at a turnaround this spring, Montana Renewables is currently producing at a run-rate of 60 million gallons of SAF per year.

It expects to exceed an 80-million-gallon run-rate by the end of this year and surpass 120 million gallons by spring 2027.

Montana Renewables expects to reach approximately 200 million gallons by year-end 2028.

The program also captures approximately 20 million gallons per year of renewable propane and butane—previously burned as fuel gas—as saleable product, improves renewable naphtha yields, and reduces unit operating costs through scale and lower water usage.

The reconfiguration represents the next evolution of more than a decade of modernization at the Great Falls site under Calumet’s ownership.

The turnaround to complete the tie-in is scheduled for the fourth quarter of 2026—timing that allows CMR to capture approximately $50 million of EBITDA at currently elevated global refining margins before the transition.

CMR will remain in service, continuing to produce high-quality retail asphalt, retaining all employees and providing shared cost efficiencies across the full site.

“Our amended agreement with the DOE facilitates innovative technology and domestic energy security at a fraction of the original cost,” said Calumet CEO Todd Borgmann. “EDF’s willingness to right-size the LGA reflects its ongoing support for Montana’s largest agricultural investment. We look forward to our continued collaboration with the DOE on the success of this project.”

Borgmann continued, saying, “We’ve worked hard to unleash the ingenuity of our engineering and operational teams, and they developed a project that captures approximately 70 percent of the originally expected benefit while spending only 15 percent of the originally expected Phase 2 capital. The DOE has kept our nation’s energy-independence goals at the forefront while demonstrating tremendous flexibility in thoughtfully working with us to adjust the loan. Montana Renewables was honored to be the first project to receive the support of the current administration, and we thank the entire DOE team for its continued commitment to this key component of America’s energy infrastructure. With the DOE’s support, Montana Renewables continues to strengthen its position as one of the world’s largest SAF producers while supporting regional agriculture, the Montana business community, our employees and our shareholders.”

The expansion increases Montana Renewables’ total feedstock consumption to approximately 2 billion pounds of ranch- and farm-originated feedstocks, converted into American-made renewable jet fuel, diesel and gasoline annually, while continuing to grow Montana’s wage and tax base with highly skilled technical employment in a rural community.

The DOE loan remains structured in two tranches.

The first tranche of $782 million was funded in February 2025 and used to recapitalize Montana Renewables, including an additional $150 million equity investment by Calumet with cash on hand.

Under the amended agreement, the remaining loan availability is reduced to a single, final draw of $34 million—down significantly from the previous additional draw of up to $658 million, which Montana Renewables expects to receive shortly, subject to the satisfaction of certain commercial, technical and legal conditions precedent.

During construction, retained earnings from Montana Renewables are expected to supplement DOE funds to maintain debt at less than 55 percent of eligible spending.

The loan retains its 15-year tenor and an annual interest rate of the U.S. Treasury rate plus 3/8 percent, with servicing of principal and interest deferred until MaxSAF® is commissioned.

The March 2029 first servicing date and December 2039 maturity remain unchanged.

The amended LGA will be filed with the U.S. Securities and Exchange Commission, and investors should refer to the filed agreement for complete terms.