The owner of the former oil refinery along Rosedale Highway has ended its relationship with a Taiwanese company it hired in 2021 to finish the plant's conversion to produce renewable diesel, though it's unclear what the separation means for the long-troubled project.
Global Clean Energy Holdings Inc. advised investors Friday it has declared CTCI's Houston-based U.S. subsidiary in default of the engineering, procurement, construction, start-up and testing agreement the two parties signed May 18, 2021.
Without stating the reason for the default, Global's filing stated "such defaults are not capable of cure" and so the agreement was terminated.
The filing noted Global's local subsidiary, Bakersfield Renewable Fuels LLC, exercised its right to complete all remaining work on the refinery's conversion, which has fallen years behind deadline and hundreds of millions of dollars over budget.
There was no word on how or whether the contract termination affects the project's timetable for beginning commercial operation. Global said in late March it hoped the plant would be ready to begin producing as much as 15,000 barrels per day of renewable diesel during the third quarter, which ended almost a month ago.
In an email to The Californian, a spokeswoman for Global wrote, “We have plans in place to complete the remaining work and start-up the facility without CTCI, and we do not believe that termination of the EPC agreement will materially impact our conversion project.”
CTCI Americas Inc. did not respond to requests for comment Monday.
The two companies have shared a fraught relationship since CTCI was brought on following the departure of a different engineering consultant on the project.
Early last year, Global unveiled a revised agreement with CTCI raising the price of their contract by a third to $275 million while also spreading out Global’s payment deadlines and establishing a system for resolving a backlog of unexpected expenses. The change did not include millions of dollars in change orders that remained to be fully addressed.
Global reported in late March it had taken steps for CTCI to accelerate the completion of the project, including hiring a third-party project management services group. Global said at that time it had "commenced pre-commissioning, commissioning and other start-up activities" but that it did not expect to begin earning money until the start of commercial operations.
In that March 31 note to investors, Global added that CTCI was seeking at least $760 million in total compensation. Global noted it was disputing that sum.