A group of Lake Diefenbaker area farmers think a signed marketing agreement with a major petroleum company sets their proposed ethanol plant apart from other projects.
Gardiner Dam Terminal Ltd., a producer-owned company that owns 50 percent of Gardiner Dam Terminal Joint Venture, wants to build an ethanol plant at its elevator at Strongfield in central Saskatchewan.
The group plans to hire a consultant to produce a business plan for a 100 million litre plant costing an estimated $85 million to $100 million.
Rob Hundeby, GDT Ltd. director and chair of the ethanol development committee, said the group has worked on the idea’s feasibility for months. He thinks the plan has attributes that will interest investors, including the commitment from a major Calgary-based company to manage ethanol sales and risk hedging.
Read Also
Canola oil transloading facility opens
DP World just opened its new canola oil transload facility at the Port of Vancouver. It can ship one million tonnes of the commodity per year.
“We thought that if we did not have a market for the ethanol, there was no use proceeding.”
Saskatchewan’s 7.5 percent ethanol mandate can already be fully met by the ethanol plant that Husky Energy opened in Lloydminster, Sask., on Sept. 26, so new plants will need a diversified market.
“By having a marketing agreement in place, we do not have to focus just provincially. We can look nationally and internationally,” he said.
Hundeby wouldn’t divulge the name of the petroleum company.
He believes farmer investors will also be attracted to a project that provides guaranteed grain price and delivery options.
“That will set us apart from the multinationals or absentee owned plants.”
The project has no plan for an accompanying feedlot to use the plant’s byproduct, distillers dried grain.
The explosive growth of ethanol production in the United States has flooded the feed market with distillers dried grain, driving the price so low that large plants such as the one GDT is proposing expect to have trouble disposing of the byproduct.
GDT is looking at burning it to meet the plant’s heat and electricity needs.
“If you have cattle or a feedlot, and a prime example is PoundMaker at Lanigan, (Sask.,) it is a beautiful operation, but you are on smaller economies of scale when you do that,” Hundeby said.
Agricore United, which owns the other half of the terminal joint venture, is following the plans with interest.
“From what we have seen so far it looks good,” said AU spokesperson Radean Carter.
She said it is too early in the process for AU to make a decision about investing in the project. It wants to see the completed business plan. So far, the planning has proceeded on sound business principles, she added.
AU recently said it wants to increase its investments in value added processing.
“Investment in ethanol or biofuel plants is not out of the range of possibility,” she said. “There are tremendous opportunities in biofuels.”
