An ethanol project proposed for northeastern Saskatchewan would have the spin-off benefit of resuscitating a mothballed dehydration plant, say project proponents.
Tisdale Alfalfa Dehy Ltd. suspended operations in 2005 because of adverse crop production conditions, rising energy costs, foreign subsidies and exchange rate issues. The company had been in business for 35 years when it was forced to close.
Two years later the original investors are spearheading an effort to build a 90 million litre ethanol project that will use the idled dehydration equipment to make a novel feed ingredient out of the ethanol byproduct.
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Distillers dried grain with solubles, or DDGS, is usually sold to local feedlots directly from the plants with little extra processing.
Ensask Biofuels Ltd., the company that emerged from the ashes of Tisdale Alfalfa Dehy, wants to further process the feed ingredient into dehydrated pellets that can be shipped around the world.
“We have actually run DDGS through our plant before,” said James Leier, Ensask’s chief executive officer.
The company estimates its proposed plant would consume 243,000 tonnes of No. 1 Canada Western Feed wheat and produce 92,500 tonnes of DDGS a year.
Some of the byproduct would be consumed locally, but Leier expects 85 percent of it would be dried, pelleted and shipped overseas to the same dehy alfalfa markets the plant once served.
The marketing agent who sold its old product has spoken with customers in Japan and other Southeast Asian countries who have indicated there will be significant demand for the new pelletized product.
International sales of DDGS from North American ethanol plants have been limited because it is a cheap and bulky commodity.
Leier said there would be transportation advantages in shipping a pelletized version because it takes up less space and won’t solidify over long distances like the bulk version.
He said it is a unique approach to dealing with the ethanol byproduct, but it isn’t the only factor that sets the Tisdale project apart from other western Canadian ethanol proposals.
“We’ve got the history. We can run a production facility. We know how to do that,” he said.
The company is also one of only four Saskatchewan producer groups to receive project funding through the first round of the federal Biofuels Opportunities for Producers Initiative.
In addition to the $280,000 it received through that program, the group has raised $5 million in seed capital from 140 area investors, 64 percent of whom are farmers.
Ensask will use the money to complete detailed engineering plans for a plant that will create 40 direct jobs once it is up and running.
The engineering phase is expected to take six months, during which the company intends to launch another share offering to raise the $30 million it feels it needs in combination with $70 million of debt to build the plant.
Leier expects plenty of competition in the ethanol sector. Many proposals will die on the page, but he is confident that with the company’s existing management expertise and $8.75 million worth of existing assets, Ensask Biofuels will be one of the firms that proceeds to the building stage.
“Our plans are to be in operation in 2009,” he said.
