An eye-popping investment planned by a startup company at the former Loring Air Force Base could come with promises from large airlines to buy its cleaner fuel even before the technology has been tested at scale.
To say DG Fuels’ plans are ambitious is an understatement. The company still is looking for investors for the plant, which is estimated to cost $4.4 billion. It must build out critical infrastructure, including a rail system and pipelines from Limestone to Searsport, some 200 miles away. It is also trying to get a similar plant near New Orleans financed and running by next summer.
If all goes according to plan, construction at Loring is to start in 2024 and end in 2027. The new business could bring an economic boost to a part of Aroostook County that desperately needs it. DG Fuels plans to create 650 permanent jobs and 2,300 during construction. It all hinges on a plan to make a type of fuel that is still being tested and has never been produced at high volumes.
The aviation fuel billed as sustainable is in demand by major airlines that need to reduce greenhouse gas emissions. Demand is so great that the total amount of fuel that the Louisiana plant is expected to produce has been taken up in “takeoff agreements,” under which fuel is effectively sold before it is produced. Delta and Air France have signed on before a shovel went into that ground.
DG Fuels expects to announce similar agreements for the Loring plant soon, CEO Michael Darcy said. He would not specify the nature of the agreements and whether they included upfront money. Having such agreements helps attract investors, he said. He expects to bring in private and government investors and lenders as well.
Darcy, who has a background in the shipping industry, is an entrepreneur who likes to exploit innovative business opportunities. Other management at the company includes President Christopher Chaput, who has a background as an investor in the aviation sector, and Michael Horner, the executive vice president of technology, who has experience with aircraft jet engines and aircraft-derived gas turbines.
The company plans to make clean aviation fuel using biomass, which could come from forests or farms. It is using a process originally developed in Nazi Germany during World War II to turn coal into diesel fuel. The series of chemical reactions that convert a mixture of carbon monoxide and hydrogen into liquid hydrocarbons, which can be further processed into the clean fuel. The company has an agreement with Norwegian firm HydrogenPro to supply equipment to help make the fuel.
If DG Fuels is able to meet its timeline at Loring, construction will start in 2024 with a solar farm to help power production. Next it will install six biomass gasifier units that use heat, steam and oxygen to convert biomass from Maine’s forests and farms to hydrogen without needing combustion. Darcy said the plant will need about 1.7 million tons of green biomass each year, a staggering one-third of the biomass Maine produces each year.
It also plans to build a 1.5-mile circular railroad on the 1,240 acres it is leasing at the base to transport the 175 million gallons of green fuel the plant is expected to produce. It would add a pipeline in an existing right of way to send that fuel to Searsport, where it will be shipped to airline customers in New York and elsewhere on the East Coast.
Synthetic aviation fuels hold promise to reduce the large greenhouse gas emissions of airlines with little changes to current technology, but challenges remain. Filling up an airplane will require that half of the fuel be synthetic and half conventional fossil fuel, Darcy said, because the current fuel also helps lubricate parts of the airplane. Without government incentives, the new fuel will cost more than the regular fuel.
But sustainable aviation fuel’s main challenge is volume rather than airlines’ desire to use it, the director general of the International Air Transport Association told CNBC. Darcy is hoping provisions of the federal Inflation Reduction Act that allow the Department of Energy to provide more debt financing could help solve that.
“That could make it possible for us to scale up,” Darcy said.