Exxon Inks 525 Million Gallon, 5-Year Renewable Diesel Offtake Deal with Global Clean Energy Holdings

August 12, 2020

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by Jim Lane (Biofuels Digest) In Texas, ExxonMobil has signed an agreement with Global Clean Energy Holdings to purchase 105 million gallons of renewable diesel per year for five years from a converted California refinery starting in 2022. The strike price was not disclosed.

The news that the Bakersfield refinery would convert over to renewable diesel came out in May. Now, we know how much will be produced and for whom. The partners in the refinery acquisition had previously noted that “Design, engineering and construction is supported by a consortium of leaders in the downstream and renewable fuels industry. The primary work will be conducted by union trades through a local Bakersfield EPC contractor, ARB, Inc., a Primoris Services Corp subsidiary.”

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The renewable diesel will be sourced from a refinery acquired by Global Clean Energy in Bakersfield, California, which is being retooled to produce renewable diesel from Global Clean Energy’s patented varieties of camelina, a fallow land crop that does not displace food crops, and other non-petroleum feedstocks. Following scheduled production startup in 2022, ExxonMobil plans to distribute the renewable diesel within California and potentially to other domestic and international markets.

Orion Energy Partners, L.P., GCM Grosvenor and Voya Investment Management provided a total of $365 in financing in support of the acquisition, retooling and operation of the facility.

In addition to camelina, various non-petroleum feedstocks, including used cooking oil, soybean oil, distillers’ corn oil and other renewable sources will be refined to produce the renewable diesel.

The Caveats

Couple of caveats here. First of all, ExxonMobil has signed a spectacular renewable diesel offtake contract in the past — with Emerald Biofuels. That one had a $70 million Title III support from DOE, USDA and the Navy, a bond financing via Goldman, and the Exxon offtake, and still didn’t pan out.

Second, renewable diesel is doing great, but this is expensive capital, the $300 million in senior debt went at 12.5% and the $65 million mezzanine debt is priced at 15.0%. And there are some stiff repayment requirements and other contingencies.

The Global Clean Energy Backstory

In the past five years, Alon divested two small California-based oil refineries. The Paramount refinery went to AltAir Fuels (now part of World Energy), the Bakersfield refinery to Global Clean Energy Holdings. The World Energy refinery has been converted over to all-renewables, now the Bakersfield refinery is proposing to convert too, as we can see in a project that aims to complete in 2022. More about the company here.

The interesting aspect is that World Energy and Global Clean Energy, via their renewable diesel subsidiaries, share some common history.

Focus in for a sec on that reference above to camelina, those are the patented varietals from Sustainable Oils, which GCEH acquired back in 2013, from Targeted Growth, a Seattle-based company that was developing camelina for the fuels markets. We reported on the acquisition here.

Ultimately, AltAir Fuels emerged from the ashes of the fuels aspirations, and Sustainable Oils went on as a feedstock-development company. Now, the two refineries that came from the one parent are owned, separately, by two entities of which the primary subsidiaries were once related in the tangle of partnerships and companies in the Targeted Growth universe. READ MORE

What’s the Difference between Biodiesel and Renewable (Green) Diesel? 2020 revision (Advanced Biofuels USA)

ExxonMobil to Purchase 2.5 Million Barrels of Renewable Diesel (Environment & Energy Leader)

ExxonMobil and Global Clean Energy Holdings sign agreement for renewable diesel (Biofuels International)