And for example, the Fifth Circuit sided with us, and we’ll see how that plays out as we continue to talk to the EPA.
Sameer Joshi: Understood. And then one, just last one. Of the actual production of renewables, what proportion was — I think it was 5.4 barrels per day on average. What proportion was RD and what proportion was SAF?
Bruce Fleming: Our guidance is a 12,000 barrel per calendar day feedstock run. And if you convert that to gallons, you’re going to get about 175 million gallons a year. We’ve contracted 30 million gallons of SAF.
Sameer Joshi: Okay, got it. Helpful. Thanks a lot.
Operator: The next question comes from Gregg Brody with Bank of America. Please go ahead.
Gregg Brody: Good morning, guys. And Bruce, are you a little bit surprised that I didn’t get to ask the RIN question? Just the thing — I’m trying to understand how to think about funding the Max expansion project. And I realize the DOE funding is part of that, but can you talk a little bit of the sequencing of MaxSAF? Will you — do you basically need the DOE funding to come in to start doing that, and then maybe you can try to tie that to ultimately the deleveraging of legacy Calumet?
Todd Borgmann: Hey, Greg, it’s Todd. We’ve said before that, that we’re not going to take on meaningful extra — just senior notes to go fund MaxSAF. And that continues to be the plan, at least until we’re completely de-levered. So I wouldn’t expect that to change. So what that means is it’s directly linked to DOE. We’ve been progressing the engineering. We can do that internally. We can do that through very minor spend to an extent. We’re getting to the point now where we have a pretty strong feel of what we have and we’re very excited about it. We’ll provide more details, actually, probably on the upcoming earnings call of what we actually expect MaxSAF to be. But we don’t expect to go forward and spend meaningful dollars until we get DOE approval.
So we’re quickly coming onto a plateau and just how productive we can be. It’s kind of like with the DOE comes the launch of MaxSAF. It’s that simple. We’ve progressed through the pre-planning phases over the past few months and really excited about what we have. So the — I guess to oversimplify, don’t expect a whole bunch of excess new capital to come in to fund MaxSAF. It’s strictly tied to DOE. No change in our long-term deleveraging plan. We’ve said that we want to reduce $300 million to $400 million of outstanding debt. That continues to be the plan, continued path and continues to be a minority sale of Montana/Renewables and free cash flow.
Gregg Brody: And would you expect any free cash flow from Montana/Renewable to come out this year, or is it all going to be reinvested?
Todd Borgmann: No, I would expect it to stay in Montana/Renewables this year.
Gregg Brody: And then just on the DOE, you made it sound like you’re optimistic you’ll hear something soon. Can you talk a little bit about what you’re hearing that gives you confidence in that? And just helps us understand what you’re thinking when you made that statement.
Bruce Fleming: Gregg, it’s Bruce. I’ll take that one. We are actively engaged with the DOE multiple times per week. It’s a priority on both sides. And we will expect to have a go, no go in the foreseeable future. This is not a case where we’ve got some PowerPoint idea and we’re running around looking for financing. We’re launching the expansion off of a real platform and the economics are compelling.
Gregg Brody: All right, guys. I think that’s it for me. Thanks for the time.
Todd Borgmann: Thanks, Gregg.
Bruce Fleming: Thank you.
Operator: The next question comes from Jason Gabelman with TD Cowen. Please go ahead.
Jason Gabelman: Good morning. I wanted to ask about the political, or I should say government support as it relates to your SAF project. Given that it’s an election year, one, how important is it that you get the loan from the DOE prior to the election? Do you see a potential for risk if you don’t get it by then? And then two, how comfortable are you with the SAF economics excluding support from the IRA given there could be some risk to the producer tax credit if there’s a republican wave?
Bruce Fleming: Jason, I’ll start. It’s difficult to speculate on an election result. And as far as the second part of your question, we are able to participate in the current legislated markets which are not only federal. Remember that LCFS matters. Remember that there’s a lot of global pressure to pull SAF into physical commerce. The commercial premiums in Europe are in the $3 a gallon range. Volumes are being mandated. State of Illinois has passed a $1.50 per gallon tax credit. So it’s a much, much broader tapestry of support than just is the future administration going to reverse the existing federal law. And I don’t think we perceive that as a large risk because if there’s not a premium for SAF, we’re going to leave it in the diesel. No premium, no SAF, and that’s globally true.
Jason Gabelman: Okay. Thanks. And then just on the DOE loan process, has there been something that’s been holding this up longer than expected? I don’t know if there’s something specific or if it’s just typical kind of government delays that you run into. But I think when you first started talking about the DOE loan, you expected it to get it as early as Labor Day 2023.
Bruce Fleming: It’s Bruce again. Your memory is correct. We actually began talking to the DOE two years ago. We didn’t talk publicly about that earlier, but as it became a real prospect on both sides, we did have a step change improvement in that conversation after the IRA legislation came through. That changed a number of things. And so we’re in actually a much better situation and assuming success, you’re going to like it when it comes out. But it did require some re-architecture based upon the change in legislative support.
Jason Gabelman: Okay. And then the final one just on Canada, which you mentioned is an important market for your renewable diesel sales. Can you discuss — it’s a bit less transparent than kind of the U.S. LCFS programs just given the federal program starting to ramp up. Can you discuss the outlook for that market? Do you expect that to become a major pull on U.S. renewable diesel production over the next couple of years as their clean fuel standard program ramps up?
Bruce Fleming: Yes. And to give a little more color, if you make a loose analogy, the Canadian industry structure is similar to the U.S. side. There’s a leader on the West Coast, that’s British Columbia. They’ve got their own model and rules that are tighter than the national averages. Same as the analogy to California or CARP, and the U.S. federal. There is a proliferation of provincial-level requirements, some of which are direct volume mandates, not LCFS style, and then you’ve got the federal overlay of an LCFS program running off of a different model platform than the BC one. So the parallels are very, very reasonable. And if you take that and project it, the tightening program just calls in more and more volume. You know, it’s supplied by import now, and the forecast is that’ll continue.
We’re in a great position to be the shipper. Now, I want to give you a different thought. The model differences in Canada are not only on the product side. They treat carbon intensity calculations differently, and particularly British Columbia does. And so there’s a real incentive to take Canadian canola and round trip it through our plant back to Canadian placed product. We’ve got one of our off-takers specifically requesting that we assign them product made from canola. So there is a lot going on under the surface. The forecast is that the global energy transition drive continues. Different local political — local regional political players will find a way to properly tune that to their ag sector, their ranch sector, in the case of tallow, and there’s no reason not to remain optimistic about the underlying industry structure.
Jason Gabelman: Great. Got it. Thanks for the answers.
Bruce Fleming: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Brad McMurray for any closing remarks.
Brad McMurray: Thanks, Betsy. On behalf of the management team here in the room and really all of us here at Calumet, we appreciate your time and interest this morning. Thank you for joining us on today’s earnings call. Have a great weekend, everybody.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
