World Energy to convert Houston biodiesel plant to make 250 mgy of SAF by 2025

World Energy's Houston facility (Photo: World Energy)

Major North American biodiesel producer World Energy is making plans to convert its large-scale biodiesel plant in Houston, Texas, to manufacture 250 million gallons per year (mgy) of sustainable aviation fuel (SAF) by 2025.

The Houston biodiesel plant is located on the Houston Ship Channel at “mile zero” of all major U.S. pipelines, World Energy stated, with direct deep-water access at the heart of the U.S. energy production and distribution complex, and directly connected to two nearby international airports.

The company bought the 90 mgy Houston facility through a joint venture with Canadian firm Biox Corp. in 2016. In 2018, World Energy acquired Biox and with it, full ownership of the Houston asset.

Earlier that same year, World Energy purchased AltAir Paramount LLC located in Southern California near Los Angeles, the first SAF production facility in the U.S.

When World Energy bought the 45 mgy SAF plant in California, it was a partially converted oil refinery. The company has subsequently decided to invest $2 billion to fully convert the complex, boosting on-site SAF capacity to 250 mgy by 2024, and overall renewable fuel capacity in Paramount to 375 mgy.

“We’ve learned a lot from what we’ve been doing in Los Angeles, so we are certainly familiar with the challenges of converting an oil refinery in California,” World Energy CEO Gene Gebolys told Biobased Diesel Daily. “Houston is more of a greenfield project, which itself has opportunities and challenges.”

Converting an oil refinery to make renewable diesel or SAF typically involves repurposing a hydrotreater or hydrocracker for processing biogenic feedstock rather than petroleum crude, but hydrogen is already accessible on site. Producing biodiesel requires neither a hydrotreater nor hydrogen, so these fundamentally necessary units must be established from the ground up in order to convert a biodiesel site to manufacture hydroprocessed fuels like SAF.

“The biggest advantage in L.A. is we had the infrastructure in place,” Gebolys said. “We have infrastructure in Houston as well—connections, tankage, racks—so we’ve got the potential in Houston to really bring the site online nearly as quickly as we will be able to in California, and at a similar or better price point.”

While the project is still in its early stages, Gebolys said they are operating under the assumption that the Houston conversion will cost approximately the same as the Paramount project—around $2 billion, more or less.

“We’re planning to drive that number down, not up,” he said.

In Paramount, World Energy put together what Gebolys characterized as “best-in-class partnerships” with big-name companies including Air Products and Honeywell. When asked whether he intends to leverage those same partners for the Houston project, he said although it’s still in the early stages of development, “We value them and definitely intend to advance those [relationships] one way or another.”

In a press released issued Aug. 18, Gebolys stated, “Houston is the logical choice for World Energy’s Aviation Zero plant two. Not only does our positioning here provide unparalleled finished-product access but provides tremendous access to global feedstocks, emerging sources of low-carbon hydrogen, and even access to captured carbon to advance commercialization of innovative new processes for the production of SAF. We’ve been operating here in various capacities nearly two decades and we recognize why Houston is the beating heart of America’s energy complex.”

The conversion projects in Houston and Paramount will get World Energy more than halfway to meeting its commitment to produce 1 billion gallons of SAF by 2030, five years ahead of schedule.

The recently signed Inflation Reduction Act provides a new SAF tax credit beginning next year through 2024, ranging from $1.25 to $1.75 per gallon, based on greenhouse-gas (GHG) reductions. The biodiesel tax credit, valued at $1 per gallon, was also extended through 2024. From 2025-’27, a clean fuel production tax credit based on GHG-emissions reductions will be instated.

“Obviously, the legislation coming out in the Inflation Reduction Act has been critical for us to make the move,” Gebolys told Biobased Diesel Daily. “We’ve been working on this for a couple of years, but the timing is right regardless of the legislation passing. We’re doing it not because of the public incentives in the legislation, but because our customer base needs us to do it. But the incentives are very supportive of causing a real transition in net-zero aviation.”

The disparity in value of the SAF and biodiesel incentives led fuel-retailer groups like NATSO and SIGMA to warn lawmakers before passing the Inflation Reduction Act that such a tax-credit structure would “undercut” and “eliminate” the U.S. biodiesel and renewable diesel market by diverting feedstock away from on-road biobased diesel production and toward SAF manufacturing.

Boston-based World Energy owns biodiesel-production assets in Hamilton, Ontario, Canada; Rome, Georgia; Natchez, Mississippi; Harrisburg, Pennsylvania; Estill, South Carolina; and Houston, Texas.

“The Houston plant has been making biodiesel this year and last year, but we are focused on where we can add the most value,” Gebolys said.

Gebolys was an early biodiesel pioneer, launching his company in 1998 when soybean farmers and their associations dominated the small but growing U.S. market. He went all in on biodiesel against all odds, making a name for himself and establishing what became one of the largest North American biodiesel companies, second in production capacity only to Renewable Energy Group now owned by Chevron.

“I really see our company’s role in the transition to lower-carbon fuels as being a pioneer—one that moves early and aggressively—and SAF is a market in which we need first movers,” he said. “World Energy has been fortunate enough to be that to date.”