A company hoping to build Canada’s first commercial-scale cellulose ethanol plant has been renewing contracts with farmers for cereal straw.
Iogen Corp. originally issued the contracts in 2005 when it was still mulling over three potential locations for its first commercial plant – Birch Hills, Sask., Idaho Falls, Idaho, and Vegreville, Alta.
At that time the company was attempting to contract 800,000 tonnes of straw in each location for what would be a 220 million litre ethanol plant.
The magnitude and location of the project have since changed. In June, Iogen signed a letter of intent with the Saskatchewan government and Domtar allowing Iogen to explore the possibility of setting up a 70 million litre plant at the old Weyerhaeuser pulp mill in Prince Albert now owned by Domtar.
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Iogen and its business partner, Royal Dutch Shell, are working on design plans and a detailed feasibility study. A final investment decision is expected in six to nine months.
In the meantime, the Ottawa company has renewed most of the straw contracts it signed with about 600 area growers four years ago.
The proposed plant will need 300,000 tonnes of cereal straw a year. The contracts are tied to the price of crude oil and will depend on whether the growers are simply piling the straw in windrows or baling it and hauling it to the plant.
Jeff Passmore, Iogen’s executive vice-president, said he thought the contracts would pay in the range of $55 to $60 per tonne for farmers willing to bale and haul the material. Poet Energy, a U.S. company building cellulosic ethanol facilities south of the border, said it will pay growers between $30 and $60 US per short ton for their corn stover. That works out to about $35 to $70 Cdn per tonne.
Darwin Krause, Iogen’s vice-president of feedstock procurement, would not confirm Passmore’s estimate or provide further details on the contracts.
He said, however, that there is enough straw under contract to meet the needs of the plant.
But that doesn’t mean they are turning farmers away.
“We have plenty to get the plant going and operating for the first couple of years but we certainly would be interested in adding more agreements. That would be great.”
Krause is also compiling a list of balers, bale collectors and truck drivers interested in hauling bales to the plant.
Passmore said the 70 million litre facility would be the first phase of a two-phase project. The second phase would double the size of the plant.
At last year’s Canadian Renewable Fuels Association conference, he said he hoped construction would begin by the end of 2009 or early 2010.
