As a project development company, Steamboat is able to offer a (1) Merchant Business Model, (2) Tolling Business Model, or (3) a hybrid of the aforementioned business models that will fit its investor and/or client needs:
(1) Merchant Model
Steamboat’s Merchant business model includes controlling all operational processes from beginning to end. Starting with a credit
worthy feedstock supplier, Steamboat will convert incoming renewable feedstock into Renewable Fuels and will also market the outgoing volumes, including all related environmental attributes.
- Steamboat Fuels has developed a commercial plan that should provide outsized financial returns and quickly recover the invested capital.
- Steamboat Fuels will secure a long-term feedstock contract with a credit worthy supplier to provide feedstock in a ratable manner at a cost-plus arrangement.
- Steamboat Fuels will also secure a long-term offtake agreement with one or more credit worthy buyers on the West Coast.
- Steamboat can arrange for the debt needed for construction, approximately 80% of the project in the form of long-term bonds.
- The Merchant Model allows Steamboat Fuels and its investors to limit their capital risk exposure while producing renewable fuels in a cost-efficient manner with robust economics.
(2) Fixed Cost Tolling
Fixed Cost Tolling offers the client the ability to have feedstock converted to renewable fuels at a fixed unit cost per gallon, providing cost certainty to the client:
- We take the Client’s feedstock and process it into three products: Renewable Diesel, Renewable Naphtha and Mixed LPG. Renewable Diesel comprises approximately 90% of the refined product mix, with the remainder equally divided between Renewable Naphtha and Mixed LPG.
- The Client is charged a fixed fee (the “toll”) per gallon produced. The toll is the same amount for each type of renewable fuel produced.
- The Client then takes all refined product for their own account. Since the Client retains title to the feedstock throughout the tolling process, all environmental attributes (RINs, LCFS credits, etc.) are retained by the Client.
- As a tolling facility, Steamboat Fuels has, in effect, “contracted cash flows” via minimum contracted feedstock volume commitments from each Client. This in turn, enables us to generate steady predictable cash flows and a profitable return on invested capital.
The tolling arrangement is very beneficial to the Client. It provides cost certainty with respect to refining costs and eliminates capital outlays that would otherwise be incurred. Further, our facility is designed to run virtually all types of animal fats and vegetable oils, either separately or mixed.
Renewable Diesel: Premium Quality Fuel
Renewable Diesel is premium quality fuel that is the result of refining low carbon sustainable materials such as vegetable oils and animal fats via a hydro-processing process. Advantages include:
- Cetane rating of approximately 80
- 85% less Sulphur than conventional diesel
- “Drop in” quality. Compatible with all diesel engines
- Can be mixed with petroleum diesel or biodiesel to improve fuel quality
- Up to 80% lower lifecycle emissions compared to petroleum diesel
- Cleaner fuel results in longer engine life
- Can be stored for long periods of time with no deterioration of quality
- Odor free, which means it is less harmful to drivers, handlers and the environment
- Carbon intensity is 50-80% lower than conventional diesel