Federated Co-operatives Ltd. plans a cautious approach to exploring alternative fuel supplies, says president Glen Tully.
A resolution during the group’s annual convention in Saskatoon Feb. 27-28 called on FCL to build an ethanol or biodiesel facility to operate in conjunction with its Regina refinery-upgrader complex.
Tully said delegates debated the merits of FCL producing its own ethanol before passing the resolution, but there was no discussion about where such a facility would be built.
There is much enthusiasm and research around ethanol, biodiesel and other energy sources, said Tully.
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“They want to make sure Federated is making the right investment for the future so we are able to react to any changes in the alternate fuel business.”
Tully said delegates also want to make sure their refinery at Regina is protected.
FCL buys the ethanol it uses. Under Saskatchewan legislation, the refinery is required to blend one percent of ethanol into its gasoline. That figure is expected to jump to 7.5 percent by May.
Tully said the FCL board of directors will review the production facility resolution at its next meeting in April and report back to delegates by November.
The board has addressed other resolutions on ethanol in past years, and Tully noted such projects require large capital investments.
“An organization such as ours, where we are spending other people’s money, we have to decide where your best dollar is spent,” he said of FCL, which is owned by 286 member retail co-operatives in Western Canada.
Steve Kramer, who introduced the resolution, pegged the cost of building an ethanol plant at $80 to $100 million. Kramer, who is president of the Avonhurst Co-op near Regina, believed that could be managed within FCL’s five-year capital budget of $1.2 billion.
“That is not an onerous plant to consider.”
He felt the board was reluctant to pursue the idea but noted there would be economic and environmental benefits for the West.
Kramer called on the board to follow the conference’s theme of leading the way and “walk the talk.”
“I challenge them to do that,” said Kramer, adding that an ethanol plant is a good fit with FCL, which is already in petroleum production and the livestock feed industry.
“It will be cheaper for FCL to do it themselves than go into the market to buy it,” he said.
Kramer also predicted that shortages in ethanol supplies are likely as governments continue to mandate increases in gasoline blends.
