The SAF Podcast

The SAF Podcast: Exolum - Stocking the shelves for SAF's superhighway

• SAF Investor • Season 3 • Episode 29

Share episode

In this episode of The SAF Podcast, host Oscar Henderson welcomes back Gorka Penalva, Exolum, to discuss the company’s latest milestone — the launch of its new SAF blending facility at Redcliffe Bay in the UK. Gorka shares how Exolum is transforming its legacy fuel infrastructure to support a low-carbon future and reveals the vision behind what they’re calling the “SAF Superhighway.”

Exolum is taking bold steps forward in the SAF market, moving beyond the traditional wait-and-see approach that has characterized much of the industry. As an independent storage company operating over 2,000 kilometers of pipeline infrastructure that handles 40% of the UK's jet fuel, they're uniquely positioned to accelerate SAF adoption. Their decision to self-finance the Redcliffe Bay blending facility demonstrates a proactive approach to building the infrastructure needed to meet growing demand and regulatory mandates.

This episode delves into the practical challenges of adapting post-war infrastructure for modern sustainable fuel blending, the benefits of pipeline transportation versus road transport for both emissions and cost, and the critical role of both national and local government support in developing SAF infrastructure. Gorka shares insights on Exolum's year-long development process, their plans to expand blending facilities across multiple UK import locations, and how they're leveraging experience from their operations in Spain, Amsterdam, and Germany.

Gorka explains why the team chose internal financing to accelerate timelines, how a two-year concept-to-commission journey unfolded, and where the “SAF superhighway” goes next.

Policy and logistics converge here. National mandates frame the destination, while local leaders help clear the path. We discuss why both levels of government matter, what reliable imports mean for producers, and how pipelines can cut emissions and reduce congestion versus road transport. This equates to nearly 200,000 trucks. Nose to tail that would be enough to stretch the entire coastline of Great Britain.

 Looking ahead 12–24 months, Exolum is mapping additional blending sites, aligning with import corridors, and engaging stakeholders, with external capital on the table for future phases. If you care about scaling SAF supply, reducing logistics emissions, and giving airports dependable access to blended fuel, this conversation lays out a grounded plan to get there.

If you want more of the back story on Exolum, listen to our first episode from earlier in the year here: https://www.safinvestor.com/podcast/146997/the-saf-podcast-exolum-throwing-saf-a-pipeline/

SPEAKER_00:

Hello and welcome back to another episode of the Staff Podcast. And this episode I'm I'm delighted to be joined by Gorka Panalva from Exilum, who we did another recording with earlier in the year. And we're doing another episode with Gorka because they've recently had some very interesting news in their announcement of a blending facility at Redcliffe here in the UK. So we're going to talk about that as well as their plans for a SAF superhighway, which we haven't had a SAF highway yet. So normally it goes sort of highway, superhighway, a bit like we have markets and then supermarkets, but they've just jumped the highway. So we'll find out why they've jumped the highway. And we're going to also look at policy and dealing with governments, both national and local, and the impact that has in building out SAF infrastructure. So if anyone's not familiar with Exilum, uh, I'd recommend go back and listen to our previous episode to get all the background of Exilum and their strategies around SAF. But Gorkus, great to have you back.

SPEAKER_01:

Well, thank you very much for having me back. Uh it's always a pleasure. And um and yeah, it's great. It's great to be here, great to see you, great to have a chat in the next few minutes.

SPEAKER_00:

Yeah, excellent. We've got a lot to get into. I'm gonna jump around a bit. So I mentioned that you've got the SAF Super Highway. Do is there an existing SAF highway, or is this the SAF Super Highway going straight to the supermarket equivalent of SAF?

SPEAKER_01:

Yeah, we just think that, you know, why go halfway when you can go all the way, right? Uh fair enough. Yeah, absolutely. I mean, we do own 2,000 kilometers worth of pipeline. We do have, you know, we do supply, well, don't supply, but you know, 40% of the jet that goes into the airplanes here in the UK goes through our infrastructure. So we thought we'll make it super rather than just you know uh tiptoe around the issues.

SPEAKER_00:

Amazing. So I mentioned the recent announcement of your blending facility, and I'm guessing that's the biggest SAF-related news you've had since we've last last had the podcast, or but there have been other bits of news that you've been slowly getting on with in the background as well as that since we last spoke earlier in the year.

SPEAKER_01:

Yeah, I mean, for us it's been a big project. Um, obviously, um it is something that you know uh we did mention before and we spoke about before. We were we we're looking at changing uh in a way our you know our business model for when we do see a big opportunity, when we do see a big market, rather than wait for somebody to ask for it, we'd rather like to move forward and you know, and rather well, rather than wait for someone to sign a contract, we would just go and do it for us because it's been an issue uh for the whole South uh you know talk that you know there's a lot of plans, there's a lot of things going on, but nothing seems to be you know happening on the ground. Uh nothing seems to be built. And what we're trying to do is, you know, rather than have a chicken and the egg conversation, we'll just go ahead. Obviously, our investment is nowhere near as big as any other producers, which have to um, you know, which we which they have to face, and and and we're sensitive to that. So we thought, you know, we'll put a little bit of our uh our share wheel and we'll try and get this moving somehow. Um as I you know, as it was said, we are the first independent um uh storage company which which can uh which can blend at the facilities, or which will hopefully be able to blend at the facilities. So we thought it'll be you know a good way just to keep this market going and prove to everybody that SAF is here to stay, and and SAF is a reality.

SPEAKER_00:

So is the blending facility a chicken or an egg? Because that debate still needs settling, which one do you think?

SPEAKER_01:

I I think is the is the route from the uh chicken to the egg, and vice versa. At least they can talk to each other, yeah.

SPEAKER_00:

Or diplomatic.

SPEAKER_01:

Yeah, absolutely. No, but I mean, you know, it's so much we can do, and I I think this is what we could do.

SPEAKER_00:

Um just give everyone, some people might not necessarily have seen the announcement or sort of understand what it is that you're doing. Do you just want to give everyone the sort of the one, two, threes about the the Red Cliff Bay blending facility, you know what it is and how long it's gonna take and the role it's playing sort of going forward?

SPEAKER_01:

Yeah, I mean, for those that don't know us that well either, I mean we we we run infrastructure which was built just after the war and is developed since. So we what we thought is that we those places that were underutilized, it would be good to you know adapt to all these new new businesses that were coming up. And Redcliffe Bay is a clear example of that. Is is a terminal that is an area where there's a lot of uh well is well is one of our main entrants into the into the network, into a pipeline network. And we thought it would be a good idea to try and bring those tanks back to life, or at least to be able to you know to maximize the throughput for them by adapting it to to this new market, to this new you know, to new new requirement, which was SAF. Um, it wasn't easy. Um, as I said, it is an infrastructure which needed some work, uh, and and underground tanks built for other purposes, definitely not for blending or or anything the like. So it took us a bit of time to be able to design it. Um, I mean the engineering team did a fantastic job say, you know, with what they had to be able to design all the infrastructure that's required around and inside to be able to blend and you know have a hundred percent guarantee that you know what's happening is is happening efficiently because we know we're talking about uh SAT, uh we're talking about jet fuel. So we want to be do we want to make sure that every molecule that goes out of those tanks uh on spec. Obviously, it's never gonna be a problem because even before that we spec'd it, we check it a couple of times uh to make sure that it is on spec. But what we don't want to do is to delay or have any problems of quality issues. So we design uh a system, a blending system, which you know can guarantee that it's gonna work.

SPEAKER_00:

And what's is it just neat SAF that's being imported into Red Cliff Bay at the moment? What's being imported that you're you're gonna use?

SPEAKER_01:

Currently, we use mineral jet. Uh well, we use um at the moment we have mineral jet coming through our system in the southwest because it's not just Redcliffe Bay, we have uh other terminal Hallen, which takes the bulk of all the imports through um through Bristol. And what that our idea is to divert some of that jet mineral jet into Ratcliffe Bay in order to be able to blend with that neat SAF and from Ratcliffe Bay onto the um onto the network or onto Hallen, depends. Obviously, that is a programming decision, um, as uh finished grade SAF.

SPEAKER_00:

And how long does it has it taken from sort of the idea conception that you were going to do this here and sort of to the point we are now into sort of final completion and operations? How long's that whole process take?

SPEAKER_01:

It's taken us a year, um, and it will be another year before well, less than a year now, in order to be able to commission it. Um, as I say, it there are a few there were a few hurdles uh in within the company because our model had to change, but again, because of you know, management uh was always in favor of this type of investment because you we all see it is the is the way is the way forward. Um the demand we've seen through one of the studies for for aviation fuel is gonna grow throughout the in the next 20 years, and for us not to be in the forefront of it as one of the main logistics uh operators, it wouldn't it would make no sense. So, you know, it it does it did take a little bit of time uh internally for to get all those approvals and to get uh all those designs ready, but in all honesty, there were there was a very strong backing from right from the beginning.

SPEAKER_00:

And you're you're financing it yourself is coming the investment's coming internally, isn't it? You don't need any external capital being used to do this recommission.

SPEAKER_01:

It would be nice, but no. We we're doing it ourselves. We're doing it ourselves. Uh uh you know, we stepping out of our comfort zone, which is always good, uh, to be able to do that and and to have the backing to do that. Um as a company. Yeah, as a company we want to grow. And this is obviously if you're in the oil business, chemicals and biofuels like we are, uh, growing in um in aviation fuel seems like the number one.

SPEAKER_00:

I think a lot of people would disagree with you and think it would be nice to be able to do things with internal capital rather than having to find external capital, particularly in the snap space.

SPEAKER_01:

Yeah, well, you know, I I say more for a financier in the sense that you know it's always nice to use somebody else's money that you can make more money out of what you have to return, but still.

SPEAKER_00:

Yeah, and and how does this we mentioned the the super highway, how does this fit into plans for for realizing that? Is this sort of the beginning of it, or is it sort of just you know part of the process? Sort of where where does it fit in? Has this been ongoing and it's just sort of an aspect of it, or are you really starting to make this a reality now?

SPEAKER_01:

We we see it as part of the proje uh of the project. Um, our idea is to uh maximize our import locations and try and offer this this this service uh to you know to all those that import a mineral jet. Um we all know that for all our efforts to produce um locally or or nationally, um we will still need imports, and the reliability in imports is going to be extraordinarily important. So allowing the flexibility for those that produce to be able to blend it with the imported uh mineral jet at the at the import location, I think is going to make everything a lot more uh fluid and a lot more efficient.

SPEAKER_00:

What what sort of volumes are we talking in terms of what can what's the planned capacity in terms of the amount that can be blended?

SPEAKER_01:

Well uh we're looking, I mean, any number I give you right now is obviously we're looking to try and maximize as much as possible of our capacity. So, you know, uh the the UK has around 12 million uh cubes of uh of of mineral of mineral jet demand per year. Well, if we're able to do two or three, that'd be very nice, wouldn't it?

SPEAKER_00:

The more the better, for your perspective, I'd imagine.

SPEAKER_01:

I mean, we are trying to maximize the capacity as much as possible. We even think it might even require new builds. Um it will very much depend on you know the general interest as well. Um, the idea is what the idea for this first project was also to kick off that that interest from from from third parties and see that we're serious about what we want to do.

SPEAKER_00:

So, you know, try and be able to make sure that those that are interested they can count on us to be able to to import both the mineral and and and and and and the um and the and blending component and or either or I'm assuming the Exilum C the bigger risk being not doing anything in this space or doing it too slowly, as opposed to seeing doing infrastructure projects like this as being inherently risky because you're so confident in the potential of the market in the UK and the role staff's going to play, and you're sort of confident in the data mandates and the way that um producers are developing and demands taking off. That the risk is doing nothing as opposed to in this in doing projects and constructing blending facilities like this.

SPEAKER_01:

Yeah, I mean, absolutely, standing still is not an option. Um, so you know, you just have to move with the market and whether you think the market is going to go, and that's exactly what we're doing. Uh, as you say, the risk of standing still is just too great. Um, because you know, um we do import uh jet fuel at the moment, well, mineral jet fuel. If you're not offering to your customers what they want, then they will go elsewhere. And you know, we we're all together on this, and you know, we want to make sure that our customers get as much services as they possibly can to be able to deliver all the way the product, finished product.

SPEAKER_00:

Do you think other people you'd like to see more people sort of taking that approach and taking a step rather than because it seems like there's a lot of people standing still waiting and seeing uh for various different reasons.

SPEAKER_01:

Yeah. I mean, from our from my perspectives, yeah. So I would like people to move forward quicker. But I do we do see, uh we're lucky that we're in a situation where we see the whole market, um, and we do see a very you know all types of of people in the sense of all types of speed. You know, we see those that are moving very quickly, those that are just moving extraordinary slowly, and those that are just not moving. Um what we're trying to show is that you know we all have to um take a bit of a step away from confidence. So but yeah, with for us, you could say that you know the amount of risk is smaller, but again, the management of our risk is always going to be proportionally smaller anyway. So when you put it on on a par, it you know, we we're not exactly doing something easy either.

SPEAKER_00:

And presumably, sort of the next step on the plan is there'll be additional blending facilities, and you're going to build out that at different locations across the UK over time.

SPEAKER_01:

Yes, absolutely. I mean, um if we can as I say, if we can join together the the input locations with a blending uh facility, it would allow all our customers to be able to you know to meet their to meet the the the demands um as sufficiently as possible.

SPEAKER_00:

And are these blending facilities sort of sort of more modular in style and they're sort of plug and play? Once you've done one, you can sort of roll it out and just keep sort of copy and pasting them, or are there more sort of individual nuance to each specific blending facility depending on where they are sort of in the country in the pipeline?

SPEAKER_01:

It's is more to do with infrastructure. I mean, what we're trying to do is actually trying to utilize current infrastructure at the moment. Um, and as I say, we I mean we do this already in Amsterdam when we talk about blending, because we blend other products not yet, but we blend gasoline. Um, we blend you know biofuels already in a lot of our terminals, so it's not something new for us. So it's just applying all that knowledge into the different locations, and it's not so much plug and play, but once you know what you know how things how products react, uh then you can actually uh design the you know um each location to what the requirements are.

SPEAKER_00:

And does what other considerations do you take into when you're locating blending facilities? Do you take into consideration you know where producers are uh in the UK, where there's planned production facilities, where you can sort of help integrate production and the supply chain, or is it purely based on where you have existing for now existing infrastructure that you can sort of adapt and and sort of recommission in that sense?

SPEAKER_01:

Well, the fact that we so integrate it within the supply chain at the moment um kind of makes that decision a lot easier. Uh, we would like to be close to the producer and to connect that producer and make him as close as possible to the demand through our pipe network. Um, so what we can't do at this stage right now is with how um nascent it is for most industry, for most players in the industry on where they are to actually do you know take that into account. We do try and take it to account. We've seen where a lot of the projects are, but you know, one of our main objectives is to make sure everyone is connected as much as possible. So we kind of it is a variation of a lot of things. One is where the imports are going to come because we know those are gonna come for sure, and then seeing where the biggest in you know industries, uh not industry, but you know, where the biggest amount of producers are thinking of putting their location.

SPEAKER_00:

Are there challenges around sort of newer bits of infrastructure that still already exist versus more longer standing older pieces of infrastructure and managing those two together to make sure they can deal with staff? Because we've had the conversation before about the purity of staff being issues, not just for engine seals, but actually seals or pipelines. There's another degree there that pure staff, there is a challenge around that. Are there challenges around newer versus older bits of infrastructure in your pipeline, or is that not really an issue you have to contend with?

SPEAKER_01:

Well, I mean, if if the airlines are happy with it, we we're more than sure that we're happy with it ourselves. But I know, I mean, we we do keep within the the the the mandate, well, the the limits of blending. Uh we do try we do adjust some of our infrastructure, some of our um assets to to what the product they're gonna handle. Um and obviously the older they are the more difficult it is. But at the end, you just you know, we've been doing this for so many years now and adapting to different products, not just SAF. You know, we had HGO, we had FAME, we've had all these different um you know, biofuels that keep coming to keep come to the market, and they all require different things. So uh yeah, it's not gonna be a problem at all.

SPEAKER_00:

I just got the feeling you were bragging that you can deal with all these different product products, no problem. It's like, yeah, bring it on, whatever you've got, we can we can handle it.

SPEAKER_01:

I used to be a fuel trader, so I could blend anything. Remember that.

SPEAKER_00:

You don't want to say that, you don't want to say that you have no idea who's listening.

SPEAKER_01:

No, but I mean we we we leverage on all the knowledge we have from the you know from having the network we have not just in the UK but in Spain and in Amsterdam and also in Germany, primarily where where you know where where we have storage locations as well as the as well as the airports. So having all that knowledge allows us to be able to have experience in all different different types of products and how they blend. We do have an extraordinarily uh good uh um um quality assurance team, and they've been around aviation fuel for so long that you know we're pretty confident that we can do most things.

SPEAKER_00:

Anyone who's UK based and is listening to this might have seen in the House of Commons Exlam getting shout-outs from the local MP in the House of Commons for this blending facility and the work you guys are doing. And obviously, national governmental policy takes a lot of the headlines in terms of setting mandates and the revenue certainty mechanism and all those things that are sort of guided towards producers and and the off-takers. But how do you see the role of sort of more regional local government in helping sort of make this make the case for why the superhighway is really important, why these blending facilities are really important beyond just sort of the the national level government that sort of everyone's more familiar with? How do you sort of look at the balance of national versus regional government?

SPEAKER_01:

Well, they're all important. Um, yeah, um and we've seen it throughout um you know all our contacts we've had we have had with MPs and members of local government as well as national government. They're all interested because they all see the importance of SAF in the market, they all see how we need to keep up with and uh with the mandates and how critical they are in in for our the infrastructure in all this. Um so for us it's not that we think one is more important than the other, we think that they're all very, very important, and we you know we have to thank them for all the support we have received. You know, every door we knocked, uh we've you know, uh especially the work that Ed uh has done throughout uh throughout the you know for the last year and a half. You know, all the MPs are uh you know, they have told us that they're happy to help, they have been very supportive, and they also see the the the value that this has in the whole supply chain. Do they have slightly different roles to play in this?

SPEAKER_00:

The national government's got very much a role of driving the sort of the national agenda, setting the setting the tone, setting the direction of where the industry is going, whereas local, more regional governments got a more a stronger focus on you know building out economic benefit for their local area or any sort of more local benefits. So do you see them doing slightly different jobs, or do you see them all as sort of being in this big sort of policy governmental basket?

SPEAKER_01:

Well, I might get killed for saying this, but I do see them doing an I do see them taking a more of a national role and an interest beyond their local um their local area. Um maybe for them is that there's interest locally, I am sure there is, but you know, when the conversation has always been on about how extensive extensive our infrastructure is and how how we can you know get to the different points in the most efficient and low CO2 way. So yeah, I would have thought that they all have the different interests. I think the government takes a much more of a holistic view, but it is obviously their role, and and they have to plan this. And I've said it before, you know, we we talked about it last time, how it will be good to have a much more united approach for by the whole industry and and government. Um, but you know, from what I've seen, the the the um the local the local MPs are supportive, they're happy to see this happening in the area because they see that things you know are moving forward in the whole SAF uh market.

SPEAKER_00:

The last time we spoke about the the emissions benefit of moving blended staff through a pipeline as opposed to with trucks, um but we didn't necessarily touch on the cost benefit and how potentially moving anything through a pipeline can reduce the end cost of the cost of the end product for the airline and you know what the producer has to sell it for. Can you give everyone a sense of you know what the cost difference is by being able to blend staff through your blending facilities, move it through a pipeline versus this this other idea of transporting everything via trucks um to their final destinations?

SPEAKER_01:

That's a great question because that shows that we have not prepared this before. As I don't have as I don't have that information at hand, I'm sure that we can add it on.

SPEAKER_00:

Yeah, even just a rough you know guideline, because you can imagine you can see it being being cheaper, but I remember that the stats that you gave regarding to CO2, the the carbon and the the emissions intensity of transporting it were vastly different in a pipeline and in a truck. But I can imagine the cost is on a there's a similar cost benefit from transporting it in this manner versus other versus sort of trucks or other means. So it's in a large proportion of the industry's benefits to see infrastructure and blending facilities like this become more prevalent, not just in the UK, but across the world and transporting it in an efficient manner.

SPEAKER_01:

Well, I mean, that's clearly because you know you see how the demand it is for the use of the pipeline. I mean, that's one question for the customers who do have to do make that calculation and they know exactly what the market is for you know moving trucks around, as well as you know, comparing it to the pipeline. I mean, we see it beyond that. I mean, the the benefit just goes beyond the the financial, the benefit, not just the CO2 savings, but you know, imagine all those roads with all those trucks uh moving moving um jet fuel up and down the M4 or A1. It will be absolute chaos uh the roads. So for us, we see it you know a lot you know beyond that. Obviously, our customers is something that they take into account, but I'm sure that the benefit is just a lot more a lot greater than just looking at the the number per se.

SPEAKER_00:

I think that needs to be your new marketing for the mass public about taking trucks off the road, because I think you'll get lots of traction and lots of popularity by doing that.

SPEAKER_01:

Well, that I mean every time I go down the M25, I can tell you I would like to see less uh trucks there or less traffic.

SPEAKER_00:

I think the less time we spend on the M25 talking about it, driving on it, doing anything about it is the better. And for anyone that doesn't know the M25, um, go to the UK and you'll immediately know you're on the M25 when you're there. You won't even need to see a sign, it's abundantly abundantly obvious.

SPEAKER_01:

Yeah, take a good book.

SPEAKER_00:

So what does the next sort of year, two years, and the ongoing sort of short-term and longer term term future look like for Exilum? Obviously, you've got the the Red Cliff Bay blending facility that's hopefully gonna that should come online sort of at some point next year. And then what what's sort of the next next objects that are sort of on the on the list that you've got you've got underway?

SPEAKER_01:

Well, the next is to actually extend uh when we talk about, I mean, it does sound like a bit you know strange calling it the the South Super Highway, but it but it is true that we want to make it you know to be able to reach different locations from different origins. Uh, so what we're working on now, and it's obviously a process which is not going to be an overnight, is to try and define what other locations we can develop projects similar to Redcliffe Bay and be able to replicate in in similar ways uh the activity that we have there. So we can you know we make sure that we can cover as much of the market as we possibly can.

SPEAKER_00:

Is that purely sort of internal discussions? Have you are you sort of having external discussions with sort of producers, other stakeholders? How do you what's the sort of the high-level decision-making process for for where these these are going to be? Is it internal, external?

SPEAKER_01:

It it is a bit of both. Um, it's obviously external because we we we like to talk to um you know local authorities as well as uh government and and different um um yeah authorities to try and see how we can do it the most efficient way, um, or so you need to talk to other stakeholders as customers to see how much demand is going to be, although we do think it's there. So the the Redcliffe Bay one being the first one is obviously one that's easier to do in a way, in the sense that you know the requirement is uh smaller. But if we want to target locations which are bigger that you know use a lot more, uh have a lot more product going through it, then obviously we need to bring a lot more stakeholders in. So is is a process of having a good project together and having as much backing as we possibly can, both internally, where we have you know the support is uh is basically is a direction that the company wants to go to towards, and obviously externally as well.

SPEAKER_00:

Is and is the idea to sort of all these future projects for them all to be internally financed, or is there a potential to look at sort of finding outside capital or does it really depend on you know the size and sort of the nature of sort of what the next the next facility looks like or have you not really considered sort of that part of it yet?

SPEAKER_01:

No we have considered it um because obviously it's important to to know where the money's coming from um and we're open to to all all options um as I say this Redcliffe we did it ourselves because we wanted to get off the ground as quickly as we could um other options you know if we have to end up doing it ourselves well we'll evaluate it I think it will be a great value for a lot of people uh assets similar to that in other places and yeah we're open to all types of we'll you know to all conversations sounds like external capital could be potentially on the table so anyone interested in this as an opportunity should um should get in touch with Gorka.

SPEAKER_00:

Yeah absolutely always happy to talk about perfect well on on that note Gorka um it was great to chat to you again and get the latest uh from what's going on at Exlam it's really exciting great to see positive movement in the SAF market in the UK really making some some positive strides um late in the year and all the best for you know the next year as the Redcliffe Bay comes online and I'm sure we will be talking before too long about how the superhighway is is coming along in in the years to come.

SPEAKER_01:

Well I hope we do and uh again thank you very much for the invitation is always a pleasure