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FOAM LAKE, Sask. — Growing demand worldwide for renewable diesel fuel has Saskatchewan’s only biodiesel producer looking to expand.
Milligan Biofuels Inc. produces biodiesel as well as half a dozen byproducts and has invested more than $2 million in research and development.
Rick Johannesson, Milligan’s general manager, said the plant is working with various groups and at its own lab to develop new products.
“We’re working with the Saskatchewan Research Council on a drop-in diesel product, which we believe is going to be a future in place of regular biodiesel,” he said.
Drop-in biofuel, also called renewable diesel, is processed to be substantially the same as petroleum diesel, so it can be substituted for diesel and be fully compatible with existing petroleum infrastructure.
That avoids the need for a costly separate infrastructure system, which currently restricts the use of plant-derived biodiesel.
Milligan began developing a drop-in biodiesel more than a year ago, said Darren Anweiler, manager of process development for the Saskatchewan Research Council.
The SRC received money to produce a diesel grade drop-in renewable fuel from the Saskatchewan Agriculture Development Fund, but needed a partner to move to commercialization.
“(We) saw Milligan as an organization that actually knows how to produce biofuel, so they bring that expertise and … knowledge of the biofuel market and so for us … those are two key pieces that have to be in place for the technology to move forward,” Anweiler said.
He said there was great interest in developing a product that required little capital to get started.
“When you look at all the infrastructure that’s required, you can use all the existing petroleum infrastructure.”
The development of renewable biodiesel will allow for production to occur in existing plants that could be located on the Prairies.
“You can now… produce the (renewable) diesel locally and then consume it locally, so farming really was our primary target market,” he said.
The next step in development is in longer-term testing, but Anweiler predicts a product will be available in the next few years.
In the meantime, plans for a pilot plant are in the works and Milligan will likely supply the location.
While Milligan’s work on a drop-in biodiesel is leading edge, bio-diesel has recently struggled.
Competition from low petroleum oil prices led to a seven percent drop in biofuel production in 2015, according to an annual report on the Canadian biofuel scene by the USDA Foreign Agricultural Service.
The slower economy has weighed on biofuel sales. However, Milligan has continued to have double-digit increases.
“In 2014, we actually increased our production by 130 percent. In 2015 we increased it another 20 percent and quarter one of this year compared to quarter one of last year we’re up 25 percent in production,” Johannesson, said.
The cost of the feedstock for making biofuel, in Milligan’s case canola, can have a big impact on profitability. Milligan has been able to keep its prices low.
“We’re the only biofuel producer in North America that we know of that utilizes 100 percent damaged canola seed in their production. We really don’t have much competition,” said Johannesson.
Milligan buys its supply from farmers with green, heated, wet, spoiled or spring-threshed canola. By acquiring what normally would have been waste in the past Milligan has managed to create an outlet for farmers for their damaged canola.
Milligan also plans to increase its current biodiesel production at the request of the Canadian government to help decrease greenhouse gases.
“Our nameplate capacity right now is 20 million litres per year. We’re looking at ways to expand that to 100 million per year and as high as 250 using multiple feedstocks,” Johannesson said.
Milligan is a recipient of Sustainable Development Technology Canada funding and is celebrating 20 years in the cleantech biofuel industry.