Next Renewable Fuels, a Texas-based company, announced last week that it had purchased the Red Rock Biofuels Project in Southern Oregon. This is a very different biofuels venture in Oregon.
It was planned to make liquid jet fuel out of wood waste, or sustainable aviation fuel. The refinery, located outside the town Lakeview, is about two-thirds completed but has been stalled due to financial problems. Next, which also plans to build a Biorefinery in Columbia County aims to modify the plant so that it can make renewable natural gas.
The wood-to-RGN pathway has not been common, as green gas has gained popularity in recent years due to large subsidies for the use of ground transportation. The green gas is often produced from waste dairy products, wastewater treatment plant gases and landfill gases.
Next CEO Chris Efird explained that repurposing Lakeview was a smart move because it had the necessary permits, as well as extensive equipment and systems. A major gas pipeline is also nearby.
Efird stated that the project is not only located near the Ruby Pipeline but will also allow us to reach the market much faster than other RNG projects.
He said that work on the site would begin in late 2018 or early 2019. The target date for operating is mid-2025.
Buy out of foreclosure
Lakeview RNG, a new subsidiary of Next, bought Red Rock from foreclosure when its developers defaulted on bonds worth nearly $300 million. Next has not revealed the cost, but Efird stated that 'the transaction was 100% equity'
Ultimately, he added, 'we view this as about a half-a-billion-dollar investment.'
Next is privately owned but in November struck a deal to go public via a special-purpose acquisition company. Many SPACs fail to reach the finish line. Efird, however, said that he expected Next's SPAC to close by September or October.
Recent redemptions of its SPAC partners' stockholders have reduced the amount that Next could receive at closing from $175 million to about 90 percent. Efird stated that this stabilised the deal, and he insisted cash wasn't the reason he was interested in the SPAC option.
He said, 'I didn't expect the SPAC would bring in a lot of money from Day One because we are bringing in money from strategics.' "But what I'm looking for is, as perfectly demonstrated in this transaction, the ability to transact when we discover interesting assets." We can trade it for equity.
Lakeview has equipment to convert woody materials into gas. The Red Rock plan would have converted this gas into liquid fuel.
Gasification will instead be used to produce methane, which can then be processed to benefit from the pipeline. Next will replace the gasifiers at the plant with those that can operate at higher temperatures.
Efird stated that although the final product will be RNG but also large new subsidies will be available for hydrogen. This is under the Inflation Reduction Act. Efird stated that the plant would initially run on natural gas, but they want to work with PacifiCorp, a local utility, for renewable energy.
Efird estimates that some permits may need minor modifications. However, he does not expect this to be a problem.
Renewable diesel at Port Westward
Permits are the bane for Next's efforts at Port Westward, in Columbia County.
There is a plan to produce renewable aviation fuel and diesel from animal fats, primarily cooking oils. This will serve markets that have been boosted by the clean fuel programs of three West Coast States. Next has a feedstock deal with BP and an offtake agreement with Shell. It also recently announced support (with contingencies from United Airlines).
The Army Corps of Engineers must issue a permit to Next for the dredging of the site and the filling of the voids. Efird stated that the Corps had said a few months ago that an environmental impact report would be completed in "early 2023." However, it is now expected to be delivered as early as next year.
This is causing Next to delay its reapplication of a water permit from the Oregon Department of Environmental Quality. Next has been denied twice by the DEQ, but without prejudice. It can now reapply. The company is facing a determined opposition by environmentalists, as well as some local farmers who view the project negatively.
Next hopes to start construction in Port Westward in 2024, possibly in the last quarter of the first year. The project will take two years. Elfird says that partners are still on board, although some seem bemused by the slow pace of construction. Others, however, have been impressed with how far Oregon has come, where projects, whether green or not, can encounter regulatory difficulties.
Efird stated that there are several other projects that they're working on and that will be announced within the same region. Port Westward's not the only project. It is, however, the flagship project. It is a massive project that we must complete.