Chris Efird is chairperson and chief executive of NXT Clean Fuels Inc., a company he co-founded in 2016. NXT wants to spend $2.5 billion to construct a plant at the Port Westward Industrial Park in Clatskanie, Oregon, that would turn vegetable oils and animal fats into renewable diesel and sustainable aviation fuel. Because the plant would be built (and likely operated) union, the project has been actively supported by building trades unions and councils and by the Oregon AFL-CIO. Union members and officers have turned up to testify at hearings and submitted hundreds of comments. On Jan. 7, the project cleared the second to last hurdle: The Oregon Department of Environmental Quality said NXT’s plan for mitigating impacts of the project complies with state and federal clean water rules, and issued a permit to move forward. Efird spoke with the Labor Press Jan. 30.
DON McINTOSH: For people who aren’t familiar with it, what is it you want to build in Clatskanie?
CHRIS EFIRD: At Clatskanie we’ve got 645 acres that we either own or lease. 145 of those acres are industrial. The balance will be one of the largest wetlands restoration sites in Oregon history. On those 145 (industrial) acres, what we want to build is one of the largest renewable diesel and SAF (sustainable aviation fuel) refiners in the world. We’re designed to do 45,000 barrels a day. That’s about 630 million gallons a year of either RD or SAF. And we can dial how much of one we make to the other, just depending on the market. That’s what we are looking to build there at Port Westward. That’s going to be about a $2.5 billion to $3 billion facility, all in, to construct. We’ll employ about 3,000 tradesmen and women for construction. It will be about a two and a half year construction period. And then we’ll have anywhere from 250 to 300 full time jobs once we’re up and operating.
Are there any plants like this elsewhere that you’re modeling on?
There’ll be five that are more or less similar to each other. There are facilities that Valero has down in the Gulf of Mexico, Gulf of America, or whatever we’re calling it these days. Phillips 66 has a facility outside of San Francisco in a place called Rodeo. Marathon has a joint venture with Neste, the Finnish company, outside of San Francisco as well, in a place called Martinez. And then Neste themselves have their own very large facility based in Singapore that until recently was supplying the West Coast or not anymore. We would be number five.
All of those facilities, ourselves included, utilize what’s called the HEFA process (Hydroprocessed esters and fatty acids.) Basically, that’s techno speak for taking vegetable oil and turning it into renewable diesel and SAF —cooking oil, soybean oil, animal fat tallow. The reason those plants use that technology is because that technology is effectively the same thing you make regular diesel fuel out of, the same as a traditional refinery. It’s just instead of feeding it with black gooey stuff, you’re putting animal fats and greases into the front end. And then there’s some modifications, catalysts and whatnot. Those facilities have a very high yield, close to 90%. So 90% of what goes in comes out as sellable product. There are other technologies that you hear about that operate at a much, much lower yield. That’s why these big plants like ours utilize this very proven technology — because you can scale it.
What feed stocks are you expecting to use, and where are you going to get it?
Because of the size of the plant, we’re going to be sourcing feedstock from all over the world, which is one of the principal reasons that we’re located in Port Westward — because it has a deep water dock. So we can bring stuff in from Asia, from South America, from anywhere we want to. So what is it going to be? It’s going to be used cooking oil, so Kentucky Fried Chicken, or McDonald’s or wherever. It’s going to be animal fat rendering, from the production of beef, from chicken, from pork, you get various types of greases, fish as well. Fish fat is a big one. Fish harvesting operations — when you take all the value out, the skin and the bones and all the rest of that, you crush it down and squeeze it, you get oil out of it. So that’s the kind of stuff. Now we can also use virgin never-used soybean oil, canola oil, sunflower oil. Those are we call virgin veg oils. They’re good feed stock. The problem with them is they have very high carbon intensity.
It takes carbon to produce them, and they’re not a waste product.
Exactly. They haven’t been used for anything else before. When something is waste, you assign a whole lot of the carbon to whatever that primary use was, and so the residual that you’re left with is low carbon. But having said that, soybean oil, canola oil, sunflower oil, are readily available. They’re plentiful. And just about anybody who’s in the business is going to use some amount of that. The trick is finding the blend between this readily available and ultimately fairly inexpensive feedstock and these more valuable feedstocks that have much lower carbon intensity. So you blend them together, and you get, hopefully as low a carbon intensity as you can get.
At the outset you came in and committed to negotiate a project labor agreement, and ultimately to have a neutrality agreement so that if the workers in the plant want to unionize, you’re not going to be difficult and run an anti-union campaign. Why did you do that?
So there’s two reasons. The obvious reason is operating in this part of the country, clearly, getting permitting is challenging, and most of the opposition comes from self described environmentalists. I take issue with that word, because they’re not actually environmentalists. They’re anti-developmentist. So you have to be able to counter that. And the most effective counter argument there is look at the jobs, look at the economic development. The most effective people to articulate that are the men and women of the unions, to be able to come in and say, “There is such thing as smart development.” Reason number two, quite frankly, is philosophical on my part. I’ve always been a supporter of labor. I think you’re never going to get rid of systemic social inequality until you return the power to labor.
There are all sorts of corporate tax incentives that you could access. And apparently you’re not actually accessing them. Why is that?
The incentives that are involved are enterprise zones, abatements, special investment partnerships. When we first came to Port Westward, the port and the community offered those up. The key thing to understand is when we decided to get into this business, because we’re a Houston Texas based company, we knew we wanted to be west coast. We knew we wanted to be deep water. These are where the key markets are. So we literally went from Lazaro Cardenas, Mexico to Valdez, Alaska, and looked at every single port. We decided we wanted to be in the United States. We decided we didn’t want to be in California. So that left the Pacific Northwest, Columbia River. We ended up at Port Westward because of the physical attributes of that port — deep water, rail availability, power, gas, etc. We didn’t come there because they had some big marketing placards saying, “Hey, we’re going to give you all these abatements.” We came there for the physical attributes of the port. Then we started talking to everybody. We got to know the community. And frankly, our tax bill there will be about $16 million a year, not small, but in the scope of a multi billion dollar project, not huge either. And when you look at the community, and you look at it frankly, what we’re going to do, coming into that community … I kind of liken it to throwing a bowling ball in a bathtub. It’s a small community. It’s going to be hugely beneficial in terms of job growth, in terms of economic development, just the knock-on effects, both in Columbia County and potentially as much across the river in Cowlitz County. Frankly, we need to pay our taxes because they need services. You know, the economic growth is one thing. They need the services you pay for with taxes. And so us paying those property taxes is not going to make an investor invest or not invest in the project. It doesn’t move the needle enough on that side of the equation, but it makes a big material difference on the community.
The Oregon Clean Fuels program. Is that a factor at all in your decision to locate in Oregon or in lining up the financing?
Clearly the various programs — California LCFS (Low Carbon Fuel Standard), Oregon CFP (Clean Fuels Program), Washington CFS (Clean Fuel Standard) — all of that is very material, because we see this product being in these markets, plus potentially British Columbia. All of those states have incentives to encourage this type of fuel. We count on those credits as part of our revenue, so we will be selling into these markets.
Is there a requirement to locate locally, or any special advantage to doing it in Oregon as opposed to elsewhere because of that?
Specifically for what we’re doing on the renewable diesel side? No. With SAF, the sustainable aviation fuel, it could be. At the moment, there’s not. That could change. In the state of Washington right now, if you build a SAF facility there, they’ve created a tax credit just for SAF. I would expect that California will do the same. I would expect that eventually Oregon will do the same. That’s added later. That was not there when we came. It certainly helped.
We first reported on this project in 2019, and you probably were cooking it up a while before then. And of course, the price tag, at that time you were thinking would be about $1 billion. Now, it’s six years later, and the estimate is up to $2.5 to $3 billion. What on earth is taking so long? On the phone a few years ago, you and I were talking about having those shovels in the ground in 2022.
I think we were overly optimistic on what it was going to take to get through the Oregon permitting gauntlet. And it’s taken a while.
Today. DEQ is our friend. We’ll see where that goes in the future. Right now they’re good. The reality is, virtually all of the state permits we had by the end of 2022, so save for one other thing, we would probably be under construction right now. What happened was we have to do a very large wetlands mitigation site. We have 114 impacted acres out of Port Westward of low value wetlands. This being Oregon, Oregon Department of State Lands uses a calculator, and that calculator came back and said because of where you’re going to mitigate, it’s going to take four point something to one. So basically, for your 114 you’re going to have almost 500 acres of wetland. So the Corps of Engineers, after originally telling us you don’t have to do anything other than just an environmental assessment, in December 2021, they came back to us and they said, You know what, we changed our mind. You have to do a full environmental impact statement to get your section 404 impact wetlands permit. Once that happened, the timeline was square out the window.
If we did not have to do the section 404 we wouldn’t have had to do the 401, so and we would have gotten it sooner. We had issues with one of the land use permits that we got cleared in November that we could have gotten cleared sooner if it hadn’t have been for this EIS process. So I don’t want to pin a tail on the Corps. They’re working really hard. We don’t have any arguments with the Corps. It’s just a very laborious process.
You have here an environmentally useful project, in an area that’s zoned for industrial, in a port that’s been waiting for a tenant for years and years, and it takes this long for, frankly, requirements that aren’t going to change anything anyway. You’ve got a situation in this country where you can’t build anything for five or six years. I mean, who’s gonna stick around for that? Apparently, you’ve been paying rent, thank you very much, at Port Westward, right?
I wanted to say you’re cleared for takeoff, but there’s one final hurdle, and that’s basically the Army Corps of Engineers that has some further step they have to take?
We have to finish this environmental impact statement. That statement then goes to the EPA. The EPA reads it, the Corps makes a recommendation. We have every reason to believe the board recommendation is: issue the Section 404 permit. That’s called record of decision. Right now we’re hoping in the fall we will have record of decision.
What does that mean in terms of some of our readers actually getting out there with earth movers? What’s the timeline at that point?
There’s three things that have to happen. Number one, we’ve got to get all the permits. Number two, we’ve got to finish our engineering. We’re working on it now. Quite frankly, some people are waiting to see that draft environmental impact statement because the reality is a lot of people think that the Pacific Northwest is where energy projects go to die, so it’s taken a long time. They’re like, ‘hey, we’re hanging with you, but get us the draft. So that’s really what we’re pushing on. And then the third thing is to secure the financing. So all of those things are moving in parallel, with the intention of having everything come together end of the year. So our hope is Q1 of 26 we’re breaking ground.
Have you selected a general contractor yet?
We have an MOU out. It’s confidential, but it is a household name. This is a company that does a lot of work in this region. They work very well. Of the really big contractors, they’re probably the most friendly to labor. But the challenge we have is for — let’s call it $3 billion to have an easy number — that has to be a lump sum turnkey contract to get financed. So, you can count on not all five fingers the contractors that have the balance sheet to be able to do that.
There’s a new administration in Washington, D.C. I’ve been reading executive orders, and you don’t know from one day to the next what’s happening. On the one hand, it seems the guy’s pro-development, he wants to get these obstacles out of your way. Let’s get some shovels in their ground. On the other hand, he seems to hate renewable energy. Is there anything that’s happened that puts your project at risk or makes you worried?
I’ll be as succinct as I can. I’ve been reading executive orders too, particularly the ones on energy. And there’s a lot of stuff in there. Not a good time to be a wind developer. But power is something he’s very focused on. So I think anything that can qualify as base load power, including solar, with batteries, I think, they will be supportive. In the energy emergency EO the White House specifically calls out bio fuels is something that they’re supportive of.
Because of that, I don’t think he’s going to be coming for us with a flamethrower. Now, having said that, those executive orders are not self executing. You know, the agencies have got to now say, Okay, what the hell is he trying to say? And let’s go from there. Beyond that, there are other things. You know, the 45z (Clean Fuel Production Credit) looks like it’s going away. The lenders credit that we had for years has gone away, and maybe it comes back, maybe it doesn’t. So right now, there’s a lot of uncertainty in terms of what kind of feedstocks can you use, what kind of credits, federally. You’ve got state credits. What kind of federal credits are actually going to be applicable, and what does that mean to the economics of the project? And so all of us, including the people who are operating right now, are sitting here saying, “What really is our economic model?” Now, the good news for us is we’re not operating today. Biodiesel operators, they’re operating in negative gross margin today. They’re not making money. Their costs are higher than their revenue, because they’re not getting the credits. They’re not getting any of that kind of stuff. That will sort itself out. The good news with biofuels in the United States is one of the principal feed stocks are farm products, and consequently, all of those farm states, bio fuels are a big thing to them. So it has really nothing to do with, “I want to go save the planet,” climate change or anything else. They want to sell their soy beans, or their corn or their canola or whatever. And so consequently, the administration is going to be listening to those people. And that’s why I’ve advised our people and some of our investors: Don’t get lost in the noise right now, because I think a lot of it is noise. I think at the end of the day, there are some things that the president can do in terms of agencies. There’s a lot of things he can’t do without Congress. And given the razor thin margins on both sides, I think it’s going to be very difficult to undo some of these things.
Are there incentive structures that were set up in some of the Biden legislation that you’re counting on to some extent?
We’re not really counting on any of the new IRA stuff. Some of the stuff relating to hydrogen, because we’ll be making hydrogen in Port Westward, is beneficial to us potentially. The project doesn’t turn on that, but it is beneficial. The 45z needs to get resolved, and it will be. Up until December 31, 2024 you had what was called the blender credit. If you made what’s called biomass based diesel, which is either renewable diesel or biodiesel, you would get paid $1 from the government, a tax credit, effectively $1 for every gallon you produce. Doesn’t matter what the carbon intensity was. Doesn’t matter if you did it overseas or here, as long as it came in and it got blended here, you got the dollar. So that ended on New Year’s Eve. Supposedly, that was going to be replaced by this 45z in the IRA, but the Biden administration didn’t get the rules out in time. The can got kicked to Trump, and Trump said no. Now he can’t say “no, I’m getting rid of it,” because that’s Congress. But what he did say is we’re pausing any new guidance, any new administrative rules. And so, in effect, he froze it. So right now, you know, you don’t have anything, you don’t have the blenders credit, you don’t have 45z. It’s a challenge.
Are you thinking that that’s gonna get worked out or resolved in the next 12 months?
It’s gonna have to. Today, there’s 2.4 billion gallons of renewable diesel being produced, and more than twice that of biodiesel. Biodiesel is a much less efficient product than renewable diesel. And consequently it doesn’t have nearly the margin that renewable diesel does. So biodiesel producers today are operating at a negative margin if they’re operating. Those guys have to get supported somehow, because otherwise that’s millions of tons of soybeans that aren’t getting utilized. There’s going to be a lot of political pressure to fix that problem. And you know, they’re going to fix it by putting one of those credits, either the blenders credit or the 45z back in. They have to. There’s no other way.
You’re still maintaining that the project will pencil out to get to breaking ground, even without these things settled?
Yes, because we didn’t build our plant based on those credits. And there’s enough demand, potentially, in California, Oregon and Washington.
There’s no RD in Oregon right now. It’s dried up and so absolutely there’s demand. What’s happened is, since Neste exited the market, the existing producers are focusing on the 9 billion gallon California market, and nothing’s making it up to Oregon and Washington. So there is more than enough latent demand sitting here.
