The Greater Baton Rouge Port Commission approved a land lease agreement Tuesday night with a Texas-based company that plans to build a renewable diesel plant that could be worth $1.2 billion in the first phase of what could be a multi-phase $9.2 billion development over nine years.
Grön Fuels LLC will initially pay the port $20,000 to lease 141 acres at the port, on the Intracoastal Waterway west of the Genesis Baton Rouge Terminal. The payment will go up to $100,000 at the end of 2021 and $500,000 at the end of 2022, unless the deal is terminated. Once Grön begins commercial operations or no later than the end of 2023, the base lease will be $3.5 million a year.
“We think they will move forward quickly,” said Jay Hardman, the port’s executive director. Hardman said the firm has an air quality permit ready to file.
Port officials said this was one of the biggest economic development deals in the past 20 years. The Grön facility is expected to support 1,000 construction jobs.
The company expects to hire 340 employees by 2024 and ramp up to 1,025 by 2031 if all potential expansions are developed. Officials said the jobs would have an average salary of about $100,000.
Officials with Grön, which is Swedish for “green,” told port commission members that the plant would use soybean and canola oil, tallow and used cooking oil to produce renewable diesel fuel. Unlike biodiesel, renewable diesel can be used in existing diesel engines, pipelines and storage tanks.
The company said it has a letter of intent with the Colonial and Bengal pipelines to connect the refinery to existing pipeline systems. This will provide access to major demand centers in the Southeast, Mid-Atlantic and Northeast, Grön said.
The Grön facility would initially produce 60,000 barrels of renewable diesel per day. In comparison, the nearby Placid crude oil refinery in Port Allen produces 75,000 barrels of oil a day.
The market for renewable diesel is growing, thanks to initiatives underway in California and Canada. 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. Canada is currently using twice as much diesel as California annually and the country wants to slash greenhouse gas emissions by 30% below 2005 levels in the next 10 years.
Along with creating jobs and producing cleaner burning fuel, Grön said the refinery will be a new market for Louisiana soybean farmers.
Grön is a company in the portfolio of Houston-based Fidelis Infrastructure LP. Fidelis invests in a variety of businesses, including green and sustainable infrastructure. Fidelis has a number of Louisiana ties: Daniel Shapiro, the co-founder is a former executive with The Shaw Group, while the other co-founder, Bengt Jarlsjo, led the project development of the Maurepas Pipeline in St. James.
To secure the project, the state offered the company an incentive package that is subject to a final investment decision, expected in 2021. The package includes 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. The company also is expected to use the state’s Quality Jobs and Industrial Tax Exemption programs and the LED FastStart workforce training program.