Santa Maria Renewable Resources, a biofuels developer with a project in East Texas, is interviewing bankers for an upcoming capital raise.
The Houston-based firm is seeking a banker to help it raise some $40m in development capital, in a role that would then pivot to arranging project finance for a final investment decision, CEO Pat Sanchez said in an interview.
The company recently announced its selection of Topsoe as technology provider for the 3,000-barrels-per-day facility, which will produce renewable diesel and sustainable aviation fuel. It also tapped Chemex to conduct the FEED study.
Sanchez is the former COO of Sanchez Midstream Partners, having left in 2020 after preferred shareholder Stonepeak took over the company.
He perceives headwinds for capital raising in the biofuels space, but believes the project profile he is promoting is superior to peers due to its hedged profile and the incorporation of a sustainable agriculture component that extracts additional value from an oilseed.
The superior returns, which he claims are north of 25% on an unlevered basis, “come from the integration of two industries” – biofuels and agricultural commodities – “on one site.”
Using Topsoe technology, the proposed plant can swing between 100% SAF to 100% renewable diesel, depending on the needs of the offtaker.
The project has an agreed-upon term sheet for offtake with an oil major. Under the agreement, the oil major is required to deliver feedstock in the form of camelina, canola, and soybean, he said.
Only one company in the U.S. closed on a development capital raise for a bio-based fuel project in 2023. That company was DG Fuels, and it raised up to $30m in development capital for a woody biomass-based Louisiana SAF plant expected to cost $4.2bn and reach FID in 2024.
“There seems to still be some headwinds in some companies on the biofuels side that are struggling to raise development capital,” Sanchez said, noting that the biofuels and clean energy sectors were some of the worst performers in 2023.
