RENO, Nevada Ñ Saskatchewan and Alberta face stiff competition from Idaho in their efforts to woo a multimillion-dollar ethanol plant.
Whether it ends up in Canada or the United States boils down to who secures government support for the project, according to the developer.
“The first of the two jurisdictions that comes up with a clean loan guarantee will probably lean us toward that country,” said Iogen Corp. marketing director Maurice Hladik.
The company plans to decide where to locate its first full-scale plant by the end of this year. Construction will begin in 2006 and ethanol will be flowing from the facility in 2008.
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Hladik told wheat growers attending the North American Grain Congress the estimated price tag for the new plant is $250 million.
Iogen is counting on its business partner, Shell Oil Co., to contribute $50 million with the remainder to be financed through loans secured by government guarantees.
The company has narrowed its list of potential locations to three communities Ñ Vegreville, Alta., Birch Hills, Sask., and Idaho Falls, Idaho.
Federal NDP leader Jack Layton fully supports the Canadian government putting up $200 million in loan guarantees to attract the plant north of the 49th parallel.
“We should take a few risks,” he said.
There are dozens of ethanol plants already operating in North America but the Iogen plant would be the first of its kind. Instead of processing corn, sorghum or wheat seeds into ethanol, it would rely on straw as its main ingredient.The proposed plant would require a consistent annual supply of 800,000 tonnes of the raw material.
While all three locations were “cherry-picked” for their proximity to large supplies of straw, wheat growers from Idaho feel they have a significant advantage over their Canadian counterparts.
“We think that our status as an irrigated region gives them a lot of stability for a first plant,” said Duane Grant, a member of the Idaho Grain Producers Association.
The state is also 13 months into an 18-month project to determine the best way to harvest, process and store that volume of straw within the necessary six to eight week window.
“There has never been a case anywhere in the world where someone has tried to gather up 800,000 tonnes of straw from a region and deliver that to a single destination,” said Grant.
Using a $450,000 US donation from the U.S. Department of Agriculture and $480,000 in matching funds from private industry, Idaho is well on the way to resolving that logistical challenge.
“We certainly hope that we have gotten a leg up through the work that we’ve done,” he said.
Hladik said with Idaho’s large volume of irrigated acres, a dry climate ideal for harvesting and storage purposes and its work on resolving logistical issues, the state does have a competitive advantage on the procurement side.
But there are many other factors to consider, such as Saskatchewan’s cheap land costs. In the end, the government guarantee issue will be the factor that tips the scale one way or the other.
“We’re just looking at who gets one first,” said Hladik.
“But this is like the Olympics. We’ve already picked out the gold, silver and bronze winners. We just haven’t decided which place gets which medal.”
For the three sites under consideration, that will be a critically important awards ceremony because, by Hladik’s own admission, investors are unlikely to fund a second plant before they see how the first one pans out, which won’t happen until after 2008.
