Red Rock Biofuels: The Digest\u2019s 8-Slide Guide<\/a><\/p>\nRed Rock\u2019s first refinery is funded in part by a $70 million Title III DPA grant from the U.S. Departments of Agriculture, Energy and Navy, and the plant is expected to produce diesel to meet military market needs. In addition to reducing lifecycle carbon emissions, Red Rock\u2019s production process will also reduce the risk of devastating forest fires in the western United States by decreasing the amount of waste woody biomass in surrounding forests.<\/p>\n
\u201cWe\u2019ll probably deliver down into the Bay Area,\u201d Red Rock CEO Terry Kulesa told The Digest. \u201cUltimately, both Southwest and FedEx require a 50\/50 blend of renewable jet fuel and fossil, so we\u2019ll blend it at a convenient terminal and then deliver to them.\u201d<\/p>\n
The deal background<\/h4>\n
Why 8 years? \u201cWe needed eight years,\u201d Kulesa added, \u201cbecause that\u2019s the way the debt works for us.<\/p>\n
Historically, airlines have been hugely reluctant to sign long-term fuel purchase agreements. What happened in this case?<\/p>\n
\u201cAt one point someone remarked to us, on the volume of this fuel deal, that \u201cwe spill more than that per year\u201d. For them, it\u2019s a rounding error in terms of the exposure they get on fuel prices by signing for eight years with us, but it gets your toe in the water and later you can make decisions on how much you want to do this.\u201d<\/p>\n
\u201cWe\u2019ve been working on this for almost 3 years. The partners are, essentially, splitting the jet fuel production between them. In FedEx\u2019s case they asked or the EU carbon credits from us, and my first reaction was \u201cwhat EU carbon credits?\u201d They\u2019re thinking long-term and about the possibility of carbon regulation of aviation in the EU, and they knew that they couldn\u2019t just flip a switch and \u201cgo low-carbon\u201d if the fuels were suddenly required.<\/p>\n
\u201cWith Southwest, it was more about price volatility. They are not flying internationally much at this time, but they have been getting whip-sawed by fuel price volatility \u2014 and they looked at this as a way of locking in some fuel at a fixed price.\u201d<\/p>\n
Future projects<\/h4>\n
\u201cWe are already working on plants #2 and #3. In some ways, no one cares about a company with one project only, they want to see a platform of projects if they are going to work with you on offtake, or debt. We know we can get the offtakes \u2014 obviously, FedEx and Southwest are interested in more. Right now we are focused on closing on this plant and getting it running.\u201d<\/p>\n
Status of the Red Rock\u2019s Oregon first commercial project<\/h4>\n
\u201cWe have the site locked and the air permit, Kulesa said. \u201cWe expect to have all the construction contracts wrapped up in a few weeks. The ground breaking is officially this fall, but what really happens is that, as soon as everything is closed on the debt side, we can order the equipment and that\u2019s what takes the most lead time, The site prep work is not very significant and doesn\u2019t take long, nor does final assembly of the components on site.<\/p>\n
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The plant is expected to produce 40% jet fuel, 40% diesel, and 20% naphtha, or 6 million gallons, 6 million and 3 million respectively.<\/p>\n