Construction of a 150-million-litre ethanol plant at Belle Plaine, Sask., is slated to begin later this month.
Terra Grain Fuels Inc. has done preliminary work on the site. It is near where the provincial government and the Broe Group of Companies had planned to build a facility about half that size before that deal fell through.
Tim LaFrance, president of Terra Grain Fuels, said Aug. 25 engineering details would be complete soon.
The plant is expected to cost more than $100 million and be operating by the fourth quarter of 2007. It will be the largest in the province and will nearly double the province’s production.
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LaFrance’s Calgary oil and gas company, Vertex Energy, and the Drummond Group, owned by former Regina lawyer Gary Drummond, are the “sponsor ownership group” of Terra Grain, said LaFrance.
“We have expanded so we have a little bit of additional capital,” he said.
Conexus Credit Union is leading a lending syndicate that will provide financing.
Both LaFrance and Drummond have extensive Saskatchewan connections. Most of Vertex’s assets are located in the province and Drummond’s family still farms south of Regina.
“Our goal overall … is to make this a made-in-Saskatchewan project,” said LaFrance.
The company will purchase about 400,000 tonnes of feed wheat each year to produce ethanol. It intends to offer incentives for farmers to grow feed varieties that produce higher yields, rather than buying downgraded wheat.
Farmers must receive direct economic value, LaFrance said.
“Our success in this plant is really how well we work in the community,” he said.
Once open, the plant should employ about 40 people. LaFrance anticipates no difficulty finding the people needed. Key people in senior positions can provide on-the-job education to others, he said.
He added that Belle Plaine is ideally suited in a utility corridor that offers the Trans-Canada Highway, and both Canadian National and Canadian Pacific rail lines.
Wheat stocks will be trucked in and the ethanol and dry distillers grain byproduct will likely be moved by rail.
LaFrance said the company isn’t worried about potential competition. The goal is to “get this one right,” make it profitable and provide long-term benefits.
He said North America is the market for Saskatchewan ethanol producers, given the supply and demand in the United States.
One of those competitors could someday be South Central Renewable Fuels Inc., a proposed ethanol company that was to have been set up by rural municipalities in Saskatchewan.
However, a drive to get RMs on board to build two 100-million-litre plants in south-central Saskatchewan stalled after just seven of the 51 RMs in the region agreed to participate.
Executive director Arnold Cornea said he had hoped at least 25 would come on board.
Representatives from the seven municipalities encouraged organizers to pursue the idea by trying to involve others and by looking at other ways to finance a business plan.
Cornea said the seven RMs weren’t close enough to each other to make even a smaller plant work.
But the fact that Terra Grain Fuels is moving ahead indicates that ethanol has potential.
“It’s almost vindication for us,” Cornea said.
