Interviewed on 02/26/2025

Q: Can you tell us a bit about yourself, your role and your company?

A: I'm Bruce Fleming. I'm the CEO of Montana Renewables. Montana Renewables was in 2024 the largest sustainable aviation fuel producer in the Western Hemisphere. I get a kick out of saying that but in a way, it's not saying much because there were only two and we were the larger of two – shout-out to World Energy, who was first. And that landscape will be changing fast. If somebody just pulled the statistics, you might misinterpret that SAF is on some kind of enormous annual average growth rate – it's not. There was one plant, now there are two plants. We took a step change – in 2025 there will be a third plant, there will be a fourth plant. We're in a very early formative stage of what promises to be a large global industry.

 

Q: Sustainable aviation fuel development is gathering momentum. What’s driving this growth?

A: There is a supply shortage. What's driving the growth is demand pull. If I tried something – and I did try this, I found it entertaining, actually – and I asked: “How much SAF is there? Who makes the SAF? Where does the SAF come from?” You’d get all kinds of stuff that doesn't exist. Sourcing credible information this early in the birth of a new industry is its own challenge. People want to know what the SAF price is – that's difficult to discover. So, I think there are a lot of unique circumstances that would be different for every one of the plants that got FID, got constructed and got online, I think they're all going to be different. In our case, we had the hardware already in place to pull the SAF out at a very, very low capital cost, so we just elected to do that as a point of optimization or flexibility. Any former petroleum refiner is going to think that way. What we expect is the industry will be forming, will have a lot of very classical supply chain activity. At the end of the day, the customers are getting the same jet fuel that they use now. We happen to make it from a different renewable feedstock, and so this is all about marrying the producers and consumers with enough planning certainty that somebody is willing to finance the project. And every one of those so far has been bespoke.

 

Q: Montana Renewables is the largest producer of SAF in North America from your Great Falls biorefinery. What has the journey been like for your company as a pioneer in the SAF industry to get to where you are now?

A: It was a pretty linear journey, and I think a pretty classical one. We've got a very good geographic location to be a petroleum refiner in the US. The thing we did that was differentiated is we wanted to keep that petroleum refinery going but still carve out a renewable feedstock lineup in the plant. So, we've actually got two different businesses that we host on the site and the crude oil refinery is otherwise pretty typical, pretty representative of a good refinery. Now, the renewable journey was quite interesting, and it went through a classical configuration study, looked at technical options, thought about the market. And the belief was that you could make a reasonably sound judgment on whether you wish to or not participate in renewable diesel. Off of that, it was an incredible speculation to participate in SAF. Anybody with a greenfield project that said, “I'm going to make a bet on SAF”, never got there. Those projects didn't happen. But recovery out of renewable diesel, that's what's leading the way. So, we set up a bet on renewable diesel. We set up a derivative on SAF, because we could do it at low risk and low cost and it gave us optionality. So that was pretty linear, but also, as I said earlier, a bit bespoke. At the end of 2024, after all of the talk and all of the years and all of the conventions and all of the thought and policy that has gone into this we have a whopping two plants in the Western Hemisphere – so very, very customized solutions. The next man up, depending how you want to read their investor materials, will either be Phillips 66 on the West Coast or the Diamond Green guys on the Gulf Coast. So, we expect there will be four people selling SAF into the market. That's still not a lot. If we've got a 0.1% penetration rate against the total Jet A fuel budget –huge demand, limited supply – it's a nascent period and we will see. I'm on record as not believing any SAF forecast more than 18 months out. And I will tell you, personally, I don't read them if they're more than 30 months out – it doesn't matter, you're making too many assumptions about the future, which will inevitably have to be adjusted. Here's a for instance: we thought we had this all pretty well positioned and optimized, and we turned on our SAF, and we had our distribution and into-airport partner.  And then in close succession, the US states of Illinois and Minnesota said, "We're serious about encouraging an industry, we will give you an extra $1.50 a gallon tax credit, if you'll bring the SAF through our airports". So, all of our previous focus was moving SAF to the west, and all of a sudden we turn that shipment around and have it go to the east so that it gets to Illinois and Minnesota. We did that, and we've gone to other states. We've gone to Detroit, Michigan and so on. So, there's formation – the nascent condition of the industry, the fact that it's changing fast. That means it's very difficult to plan, very difficult to have assurance that you've got the correct positioning and the correct competitive advantages. Instead of trying to answer those questions, we went for maximum optionality. We can hit any current low-carbon fuel standard market in North America on a shorter delivery chain than anybody else. So, we expect to keep up with the forming of the industry. We expect to do well in that environment, but we're not predicting what the stable future condition looks like. I don't think anybody can.

 

Q: How does the recent $1.44 billion DoE loan facility impact your expansion plans and production capabilities?

A: It finances our expansion plans. Let's be blunt, these sorts of projects have a long, difficult road to convince investors to put money at risk. One of the reasons that's a long, difficult road, which I've already alluded to and I'll reinforce, is that the public policy supports – plural, the collective policy supports – while aligned and going in the direction of an energy transition, these supports are not fully coherent. So, you get a government agency or a state actor or a region altering the policy support, and you have affected the risk thinking of the investors. I realize that's a mouthful, but if people are not sure about the planning environment, they're not going to give you their money. The DoE understands that, they appreciate it. They provided a very professional team and a bunch of third-party advisors, some of whom I know, some of whom are industry features. They subjected us to three years of due diligence, and we had an operating facility. I can't imagine how you ever get to "yes" if all you have is a business plan and you're going to build a greenfield site. So, each forward decision is bespoke. Financing is the limit. The planning environment is volatile. The public policy component of the planning environment is important, and we took the leap. We've been very satisfied with our position in the SAF space. We hope that that remains the case. And so, with the DoE providing appropriately priced financing and supporting this in partnership, then we're going to go ahead and expand. Our 30 million gallons of SAF that we talk about, that was our design point. We've actually run the plant to 50 million gallons per year run rate, but that's about capability limit without certain modifications. DoE has been willing to finance those modifications, so we're going to go to an intermediate step of 150 million and a final step of 300 million gallons of SAF capability over the next several years.

 

Q: How does Montana Renewables' SAF production process differ from other manufacturers in the industry?

A: We're a HEFA producer, and for those that aren't familiar with that, it just means we're starting with vegetable oils, cooking oils, animal product wastes like tallow and corn oil. Anybody like us can make the same products out of those same feedstocks. I consider the technology proven, it's derivative of very old-line refining technology. Anybody can do this SAF recovery– we were somewhat surprised that nobody else did. We had a dozen or so renewable diesel plants show up on the North American landscape, generally former refinery sites – not everyone, but generally – and nobody else recovered the SAF. We're not sure why not, but we did, and we're very satisfied with that position. The others can, they need to come back and make an additional investment and so one by one, we assume they'll consider that investment and make a decision. Just in the San Francisco Bay area, you had two large refineries switch to become renewable diesel platforms, both about the same size. One of them elected to recover SAF and one of them did not. So, it's still very bespoke and very unclear why the participants make the choices they make. The punchline is that the available SAF is increasing. One by one, people are entering the space as they cross this financing and risk threshold, but we are going to level out short of the national goals unless policy support finds a way to finance the greenfield projects, because the brownfield projects are now just about tapped out. We're not going to shut down any more refineries to make them renewable feedstock platforms – that was a one-off, it's over. Where does the next tranche of supply come from? And the answer is financing available for greenfield projects.

 

Q: Can you talk more about what the demand picture looks like currently and what needs to happen to drive further uptake of long-term SAF contracts in the future?

A: Yes, this is actually very, very interesting and I'm going to tell you a specific story about Minneapolis. If I set the stage briefly, the US passenger carriers, the flag carriers – Delta, United, Alaska Air, JetBlue, etc – went through a phase of experimentation and they all were trying to think about the future and how they wanted to participate in SAF. And after the experimentation, certain things popped up. They're all talking the same language, and the language is, “let's shoot for 10% SAF by 2030”, so this is now just about an agreed target for all of the airlines in in North America, 10% SAF by 2030. As I mentioned, there's not enough supply, and we're not going to get there because of financing limits. As the public policy becomes reliable in support of these investments, the investors will come but it is 2025 now and if you want to be running in 2030, that's only six years away. It will take all six of those years to finance, permit, design and construct a greenfield plant. So, it's going to be nip and tuck whether we get there. And so, I think the critical question isn't as much whether the public policy is supportive as whether the buyers are. If the people who purchase tickets, if the people that ship parcels, if the people who fly private jets, and maybe have a reputational ability to help support the industry formation – if all of those people will chip in, then you have additional support that's going to be very, very important. I notice every time I buy an airline ticket, I can check a little box to offset my emissions and they'll collect a fee. Those are going to be useful devices going forward. But the most important is some kind of a buying consortium that obtains the SAF, makes the blended into-wing product and gives it to all of the airlines as a level playing field. They all get the same cost. No one airline can lead this because no one airline can afford to pay more than its competitors for fuel. How do you solve that? Well, you make that a level playing field – a buying consortium is a good way. And now I'll tell you the Minneapolis-St. Paul story. As a producer, we were invited to join a several-day meeting of the Greater Minneapolis-St. Paul partnership-led Minnesota SAF Hub. And they had an excellent intersection of local policy – this is state policy in Minnesota and city policy in the Minneapolis-St. Paul Twin Cities – they had NGOs, they had farmers and people that eventually are going to supply feedstock. They had the ag businesses to do the processing. And they had us, and they were talking about how many years in the future they could get some SAF in Minneapolis-St. Paul. And I asked, “How does next week work for you? We make it now, we can ship it now”. And that was very interesting, because their paradigm was building a large industry and thinking about a future state. Our paradigm is just do it, just experiment. The market will sort that out. But if Montana Renewables has an advantaged geographic position, which we do, if we can very readily supply pretty much any airport in the upper left-hand corner of the North American continent better than anybody else, which we can and if we can do it today, then everybody is free to place an order and to try this. Delta was the one to place the order. And we actually made that out of a crop of the future, camelina, that was grown in North Dakota and Minnesota. It was processed by Cargill, the oil came to us, we made the SAF. We blended it with the fossil fuel to the ASTM specs, we sent it back, Delta put it into the wing of a flight to LaGuardia. That is a whole lot of people working together to demonstrate proof of concept. Once you do that, the door is open. Now the floodgates are open, so there is going to be a tremendous amount of supply of SAF attracted into Illinois and into Minnesota now that the first movers have shown how you do that. I have every confidence.

 

Q: How has Montana Renewables contributed to job creation and economic development in Great Falls and the surrounding area?

A: A margin-add investment in a clean industry is one of those rare things that nobody shows up to object to. Part of the reason we were able to create our first-mover advantage was that our partnership with the State of Montana worked really well. The state has to broker the public interest, the private interest – which is us – and possible policy interest that the government might have, and all of it was aligned. There weren't trade-offs, there weren't people being asked to sacrifice something for something else. So, I think that was foundational, that opens the door. We purchased a refinery from a prior owner here. When we bought it, there were 90 people. We expanded it and then there were 180. We put Montana Renewables in place and we have 300 employees now. We also attract a certain percentage of full-time contract employees and we've got a community multiplier. We had the University of Montana do a study. They have an economic forecasting model that the state government uses to assess these things on a consistent basis. And they said, in essence, more than 3,000 people are employed in the State of Montana because we are here doing these things – 300 of them draw a paycheck from us and the rest of the 3,000 have the derivative jobs. There's a restaurant across the street because our employees go out for lunch, you get the picture. So, it's been a huge win. The city was supportive. The fact that, through a sheer accident of timing, we built all of the Montana Renewables platform beginning in the COVID year and immediately thereafter, that carried a lot of businesses here, which would not have survived if we didn't have that large one-time construction payroll running through the city of Great Falls and running through Cascade County. So, we're actually pretty proud of that. It was an accident, but it's nice to have a lucky accident. And the community benefited, obviously, from the from the stabilization of what was otherwise a pretty rocky road – COVID and COVID recovery. It was serendipitous, but again, you're here, you're making this difference and then once in a while, it’s a super important safety net under some externality.

 

Q: What initiatives does your company have in place to engage with and support the local community?

A: That's very interesting. As you grow, you realize this and this comes with growth.  We were always professional, trained, regulated operators—technical manufacturing is heavily regulated – all kinds of agencies and all kinds of compliance requirements – and we've got a highly trained, skilled and highly paid workforce as a result. But what about right outside the fence? We're in a disadvantaged part of the country. This is below a lot of national economic metrics here. Population densities are low, a lot of the state economy is farm or ranch, and so as we've grown, I think we've reached the point where we're going to more deliberately engage with the community. I'm going to give you a specific example of this also, but as part of the first couple of steps, we're hiring new, dedicated employees. Reporting to Media Oakes is a new director of communications. It's not a position we had when we were a small business with 90 employees a few years ago, but it's a position we determined would be helpful going forward, now that we're larger. We similarly created a position for a state government relations person so that we could be known and have personal relationships with the regulators and the agencies there in the state government in Helena, Montana. And then the community outreach that follows from that goes in a whole lot of directions. We participate in food banks. There's a 'help people with high fuel prices' program. We're regularly engaged with the community through a structured community advisory panel. We get to hear the concerns of the community members. They get to hear what we're doing, what might be coming that they might be interested in in the future – we get asked all kinds of questions. Some of them include: does the new administration in Washington change anything? Short answer: no. But people are very interested, and very aware that there's interconnectivity here. So, we're focused on this very deliberately and intentionally and Media has been partnering with me to figure out what that should look like, and it’s turned into these dedicated employees. Going forward – now I'll tell you the story – the feedstocks that we use, they are waste products from food processing activities to feed people. We're happy to run waste, and we think that's a direction that everybody supports. But the other thing that we can run is any seed oil. So, if you grow a crop and the crop has a seed, you take the seed and squeeze it, it's like squeezing a grape to make wine – you're going to have an oil that we can use right now. All of that's imported from out of state. All of our feedstocks are coming from outside of Montana, because the food preparation activities that generate those wastes, or the seed preparation activities that generate the seed oils, those are all outside of Montana. Were those processing industries located right next to us, which now they can be, everybody is going to benefit. We call that the locavore strategy – if you ever went to a restaurant and it says "we're locavores", and down at the bottom of the menu, "we got our sheep from this ranch across the street, and we got our potatoes from here, everything's within 50 miles of the restaurant" – we aspire to that. We think we can take the Montana ag sector – the farm and ranch people that are already providing our feedstock. We can eliminate this long, round trip out of state, we can have all this be quite local. That raises the economic prize for everybody. History shows that those benefits flow back to the farm sector. We consider ourselves the largest ag investment in the history of Montana. The fact that we're making a renewable fuel from the ag products that we purchased is just a detail of what we use those products for. We think this is very, very interesting, and it's going to be a success model going forward.

 

Q: How do you balance the dual nature of your facility, producing both renewable and traditional fuels?

A: We don't see that as an issue. It's the energy transition, it's not the ‘energy shut down and start over with something else’. That's a suicide mission – as a personal comment – that's a 'you've got to be kidding me' moment. Energy is always transitioning. It's always been transitioning. I've got a chart I use sometimes – 150 years ago, all of the energy was from burning wood, then it was from burning coal, then it was from burning something that we got from whales, which we killed to do that. I think the discovery of crude oil and sourcing products from that arguably saved the whales. You go from crude oil to natgas. We were supposed to go to nuclear – we got tangled up in the ‘60s on that, but it's coming back now. It's always evolving towards more efficient, lower-cost, cleaner energy. Always. The fact that we want to make it from crops on a shorter CO2 cycle, that's a detail – the engineers like me can do that. You give us the rules, we will comply in an optimized way that connects the benefits of low cost, reliability and cleanliness.

 

Q: What partnerships or collaborations has Montana Renewables established to support its projects?

A: Several. I've already mentioned the importance of the community engagement, including the state government – well, state and local, because tax policy is local. All of that has to be aligned and it was in our case. I think the partnership starts there, because otherwise you don't get permission to construct, or you don't retain permission to operate. So, those things matter. Right after that, it's very important in my mind as a conscious business decision, to partner in some fashion with the customers to whom we sell our product. Eventually, that's the airlines but I told you a story that exactly which airlines at which airport might be dynamic, and we were flowing west, and then suddenly we were flowing east because of basically state government preference. So, a very, very good partner – if it's going to be a dynamic external environment – will be somebody that already has all of those airport-fueling activities, an aviation fueling company of some sort. There are lots, and they specialize in different things. After a kind of bidding process, really, we selected Shell. And so, Shell takes all of our SAF, and they take it wherever it makes sense to go. So our SAF on the West Coast has been as far south as Los Angeles, it's been as far north as Vancouver. If we stand in Montana, I mentioned we used to ship west, but now we have also gone as far east as Detroit. We've hit O'Hare, we've hit Twin Cities. If you pull out the map, we have covered an enormous chunk of the US and a pretty good chunk of the North American continent. We would not have been able to do that, but a national-scale distribution partner can. And that all ties back to the buying consortium comment again. If we can distribute pretty well anywhere we need to, and if at that point – pick an airport – if at Minneapolis-St. Paul, we've created a level playing field for the airlines because it's 10% SAF and everybody is seeing the same price for their fuel, that's going to work. So, a shout-out for the second time to the Minnesota SAF Hub for creating this. We showed that it would then operate. Now it's off to the races.

 

Q: How have you found the response from the engineering, procurement and construction industry to your project development plans? And what would you love to see from this industry to help support the roll out of these projects further?

A: On one level, the things that any renewable fuel producer might need to construct are known things. You might need to build a hydrogen plant – we built one of those. The industry is full of them. There are a lot of good EPC firms that can give you a high-quality hydrogen plant. You build what is otherwise petroleum refining, chemical engineering technology. That's not difficult either. The magic is inside where the catalyst is capable of converting a renewable feedstock instead of a fossil one. There are important differences, but there are at least half a dozen very qualified catalyst vendors. We chose Topsoe and they've got a large percentage of all of the business in the world, but there are many choices there. So far, I don't think we've asked for anything difficult, but we are at the beginning of something important. Once you create the new condition – and we've got everybody focused on SAF now, but four years ago, everybody was focused on renewable hydrogen and four years from now, we'll be focused on the next frontier – once that happens, you unleash a lot of new thinking from a lot of smart people. And sure enough, here comes one idea that wasn't actually in anybody's plan. Here's the innovation, here's the new thing. In our case, it was a feedstock pretreatment technology that we got from a licensor. This new technology has one licensor. So, there's going to be a development curve on something that's really legitimately new. Who knows what that'll look like down the road? But the answer is, it'll look better, it'll be better, it'll be improved. There'll be new discovery. I think the same thing is true of feedstock. If I just close the circle all the way, some of the things that the EPC firms will do differently will be around feedstock procurement and treating. An oil seed crusher integrated with a refinery – that's a new frontier. The integrated capital is going to be a lot less if the crusher and the renewable refinery are co-located. There are enormous capital and operating expense synergies. Nobody's built one like that, but somebody's going to be first. We are attempting, by the way, to attract a crusher to co-locate outside the fence. We might be first, it's possible. But there's a lot of know-how there, and we as the renewable fuels producer don't have it. Operating a seed crusher requires a lot of know-how, a lot of experience – there's a lot that goes into that. So, somebody's going to bring that solution as a service to somebody like us and we will engage that service and bring that into being. And then we've closed the locavore conversation, haven't we? Because now the seeds grown in Montana can stay in Montana and be processed here. I think this is a virtuous spiral that has quite some way to still run upwards.

 

Q: Are you utilizing a modular approach to construction in any of your projects?

A: Yes, very much so. We don't disclose our capital budget, we do give broad guidance, but – I'll just make up an example – if we said, we're going to build a billion-dollar thing here and call it Renewable Max SAF 300 or whatever, that's not a megaproject, that is 10 hundred-million dollar projects. Our hydrogen plant that we built was a small hydrogen plant, 21 million cubic feet a day, tiny by refining industry standards, well below $100 million, modular. We'll have a water treater. We'll have a cogeneration unit for renewable steam and electricity, and we'll add a reactor for more catalyst volume. These are very, very tactical. So we have a program, but within the program is a sequence of steps – 17 steps in our case – but no one step is particularly large. And what we like about that is it's possible to stage the EPC work if you're efficient. If you get a good EPC partner that knows what they're doing, it's like building a subdivision – the guy pouring the basement does this one, then this one, then this one. You can get some very efficient marshalling of the craft workforce in a modular sequence.

 

Q: How has cost inflation impacted your projects over the past few years? And what ways have you found to mitigate these impacts?

A: That's interesting, and I'll take that in two directions. Everybody can pull their subset of the CPI, the data that they think affects them. Our tactical experience was we were pretty lucky on our first project that we've stood up and been running since 2022, pretty lucky that we were launching that through and just immediately after COVID, because the supply chain disruptions then came at the end of our investment at the end of our field work.  And I think the supply chain disruptions have now normed out, and so there was a discontinuity there that we were fortunate not to get caught up in too much. So, I feel pretty good go-forward. We do see certain specific items that seem to have taken a step change in cost for whatever reasons. But broadly speaking, we feel pretty good about our cost estimation. Most of the goods and services are bulk. An awful lot of what we're putting up is simply steel and concrete put into the form of foundations and reactor vessels and pipe runs. We're not off on any exotic metallurgy or high-tech machining activities. We feel like we're catching a good forward period over the next couple of years where the folks that supply all of those things I mentioned are in pretty good condition on their order books and can accommodate us.

 

Q: At the intersection of policy and private participation, where do you think big investments and government support are most needed to support the growth of SAF?

A: That's the 24-carat question. The EU – and apparently Asia will join in country by country – have gone the volume mandate route, and they're simply going to order a percentage of SAF into the pool. That will force supply, but it's going to force it erratically. If there's a shortage, the EU penalty regime will create enough pain that somebody will attract in more supply to get that stabilized. We'll see how that plays out. In the US, we've typically said that we have an incentive structure. It's not strictly true, because the renewable volume obligation is at the root of any of this. Right now, of the road gasoline and diesel fuel in the US, 12% has to be renewable by law. The EPA administers that.  A bunch of ink could be expended on RINs, which is the currency of truing up the supply-demand balance. And when you look at that, we've got a volume obligation too. It's just indirect – the underlying hope there is that the market will have the latitude to find a smarter way, and not just a brute force 'thou shalt' on a volume blend. We'll see how the experimentation goes, but I would label it that. I would say SAF will find a way to a coherent policy but right now, it's more speculative and it's changeable. So, what do we really need, if we tie this whole conversation together? A stable policy regime which created clear incentives, which could be financialized by a lender or investor to allow the construction to occur – that's the circle. It's not rocket science, but nobody's going to give you their money if they think they're not going to get it back. And the first question we were always asked when we were setting this up five years ago was, “What if the government changes the rules?” It's still the question everybody's asking for sure, and it won't go away until the rules stop changing.

 

Q: Is high-quality feedstock availability for SAF an issue for you and how are you addressing it?

A: No, there is no shortage of feedstock for this industry to go in this direction. There was an initial reaction, probably back around 2021 or so a bunch of people said there's not enough feedstock. That's crazy talk that utterly fails to appreciate how flexible commodities are if you show up with a new demand or a new price – unbelievably flexible. And that's never been an issue for us. Montana Renewables in particular sits in the middle of a feedstock exporting geography, so leaving the area around us is 10 times the volume that we use. We simply tap into that export flow. That makes us a preferred customer for all these feedstocks, so that's a win-win and we want to draw that circle tighter, be the locavore and make this a very freight-efficient activity. The less shipping, the better for everybody.

 

Q: Where do you hope to see the SAF industry in the US by 2030?

A: Anybody that is not financed by a year from today won't be running in 2030, so we are at the fork in the road, and I think it'll be very important what signal the EPA sends to the markets in a couple of months, because they're going to go ahead and roll the renewable volume obligation numbers forward. They do that periodically, everybody's watching that. If the renewable volume obligation is light, if it's a low number, nobody's going to invest in renewables.

 

Bruce Fleming will be speaking at the Sustainable Aviation Fuel Engineering & Construction Conference this June 11-12 at the George R Brown Convention Center, Houston - https://www.epcshow.com/sustainable-aviation-fuels