$9.2B Fuel Complex Planned for LA
Last week, Louisiana Gov. John Bel Edwards and Fidelis Infrastructure co-founders Daniel J. Shapiro and Bengt Jarlsjo announced that their portfolio company, Grön Fuels LLC, was launching a feasibility study regarding the construction of a renewable fuel complex.
According to reports, the complex could involve up to $9.2 billion in investments over several phases.
“This renewable fuel production facility will help to secure Louisiana’s place as a leader in environmentally friendly energy production,” Gov. Edwards said. “Growing global demand for renewable transportation fuels creates a significant growth opportunity for our state. Once again, Louisiana’s port, rail and pipeline infrastructure and other logistical advantages are making possible an important industrial complex that will deliver many quality jobs for our skilled workforce. We look forward to the final investment decision for Grön Fuels to launch this innovative project at the Port of Greater Baton Rouge.”
Renewable Fuel Complex
Fidelis Infrastructure Partners LP is a Houston-based, independent, infrastructure fund-management firm focused on investments in high-demand renewable, sustainable and digital infrastructure sectors in North America. Prior to its interest in the renewable fuel complex, Fidelis was involved in a variety of projects ranging from $40 million up to $2 billion, including fiber-optic networks; solar power generation; downstream petrochemical; long-haul, high-voltage electric transmission; and gas pipeline projects.
Governor John Bel Edwards announced Tuesday that Grön Fuels LLC is studying the feasibility of a renewable fuel complex at the Port of Greater Baton Rouge.Posted by WBRZ Channel 2 on Tuesday, November 10, 2020
In March of this year, Fidelis and Louisiana Economic Development (LED) began formal project discussions about Grön Fuels and building at the Port of Greater Baton Rouge. To secure the project, the State of Louisiana offered a competitive incentive package—subject to a final investment decision—which included LED FastStart comprehensive solutions and a performance-based grant of up to $15 million, payable at up to $2.5 million per year for six years, for project development and infrastructure.
For the last 11 years the FastStart program has been reported to be the nation’s top state workforce development program; however, Grön Fuels is also expected to utilize the state’s Quality Jobs and Industrial Tax Exemption programs.
“This is a transformative new company and investment for the Capital Region, and we have enjoyed working this project with company executives over the last year,” said President and CEO Adam Knapp of the Baton Rouge Area Chamber. “Fidelis brings hundreds of quality, high-paying jobs and huge capital investment during a critical time for both jobs and innovation for this sector. This is a big deal, and puts metro Baton Rouge on the map as home to the largest renewable fuel refinery in the world.”
According to the Office of the Governor, the complex would be built in stages over nine years at a 141-acre site leased from the port, starting with a capital investment of over $1.25 billion, creating 340 new direct jobs by 2024. Although, all phases and associated projects are expected to create an estimated 1,025 new direct jobs. However, overall, the LED estimates that the project and subsequent phases would result in 4,560 new indirect jobs, for a total of 5,585 new jobs for the Capital Region.
To lease the property, Grön already paid the port $20,000, and is expected to make another $100,000 payment at the end of 2021 and a $500,000 payment at the end of 2022, unless it terminates the lease before those dates.
Once Grön receives approval from investors to fund at least $200 million of the plant and start the transactions needed to begin construction, it will pay the port $3 million. After commercial operations at the plant begin or no later than 2023, the base lease will be $3.5 million a year.
“This project would significantly contribute to the West Baton Rouge Parish economy, the people and businesses of our community, as well as our farmers and related industries,” West Baton Rouge Parish President Riley Berthelot Jr. said. “We look forward to working with those involved in the project to help progress it through feasibility and investment.”
Once completed—which could be as early as 2030—the base project is slated to produce up to 60,000 barrels per day of low-carbon renewable diesel, with an option to produce renewable jet fuel utilizing non-fossil feedstocks, including soybean oil, corn oil and animal fats.
According to figures from the California Advanced Biofuels Alliance cited by Grön, by 2030 renewable diesel will make up 80% of the market for diesel in the Golden State.
Unlike biodiesel, renewable diesel can be used in existing diesel engines, pipelines and storage tanks. The renewable fuel complex is expected to be one of the largest in the world and with the help of Colonial and Bengal pipelines, Grön intends to connect the refinery to its existing pipeline systems, which will provide access to major demand centers in the Southeast, Mid-Atlantic and Northeast.
“Louisiana’s core strengths in the field of building and operating plants that produce fuels and products for the world, coupled with its logistically advantaged deepwater location at the nexus of energy and agriculture, serve as the launching point for a new ‘high tech’ transition of the region into the next generation of energy,” Fidelis Managing Partner Dan Shapiro said. “I’m proud to be involved in this exciting project as we work to advance it through feasibility and its next steps.”
While the project’s next move is to file an air quality permit with the Louisiana Department of Environmental Quality, a final investment decision is expected in 2021, which will determine the final cost of the project’s first phase.