Officials with Grön Fuels said they are shooting for 2021 to break ground on a multi-phase renewable diesel fuel plant at the Port of Greater Baton Rouge that could be as much as a $9.2 billion investment over nine years.
“2021 is when we want to get started with it,” said Daniel Shapiro, co-founder of the Houston-based company. “We’ve got a significant amount of engineering work that’s going to be done. That’s the key thing that will determine when we start in the year.”
Grön signed a land lease agreement with the port Tuesday night for a 141-acre site on the Intracoastal Waterway, west of the Genesis Baton Rouge Terminal. The company said its next move would be to file an air quality permit with the Louisiana Department of Environmental Quality.
If all goes well, the bulk of hiring would start in 2024 for the $1.2 billion first phase of the project. Grön said it will have 340 employees hired by then, with an average annual salary of just under $100,000. The workforce could ramp up to 1,025 workers by 2031 if all potential expansions are developed. The project is expected to support about 1,000 construction jobs.
Grön, which is Swedish for “green," is a company in the portfolio of Houston-based Fidelis Infrastructure LP. Because it is a portfolio business, it had been using a placeholder name of “Greentech” during the initial lease discussions. Fidelis invests in a variety of businesses, including green and sustainable infrastructure.
The plant will use soybean and canola oil, tallow and used cooking oil to produce renewable diesel fuel that is cleaner than conventional diesel, officials said. Unlike biodiesel, renewable diesel can be used in existing engines, pipelines and storage tanks.
To lease the property, Grön paid the port $20,000 Tuesday night. The company will make a $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. When the company 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.
Once Grön begins commercial operations or no later than the end of 2023, the base lease will be $3.5 million a year.
Jay Hardman, the port’s executive director, said Grön needed a site in order to get funding from investors for the plant and to move forward with getting necessary permits. He noted the company had not asked for any capital improvements be made to the property.
“Certainly we will be taking a chance, but we have additional land adjacent to them we can use to entertain other prospects,” Hardman said. “We have not hamstrung ourselves on this piece of property, hoping this comes to fruition.”
Grön has some financing lined up with Ridgemont Equity Partners and undisclosed firms, said Bengt Jarlsjo, a Grön co-founder. There are customers lined up for the renewable diesel that will be produced at the facility.
“We kind of think we may need a customer before we started this,” he quipped. “This is not our first rodeo.” Commercial contracts with customers are subject to confidentiality and may not be released until after construction is well underway, Jarlsjo said.
It will cost about $2.50 a gallon to make diesel from soybean oil at the plant. But through the wholesale sale of diesel and various federal and California tax credits, a gallon of the fuel will generate well over $5 in revenue. “We’re not going to make all of that profit,” Jarlsjo said.