The company that broke ground on Western Canada’s first large-scale biodiesel plant has put down that shovel and is contemplating picking up a new one 250 kilometres away.
On Oct. 15, 2007, Canadian Bioenergy Corp. broke ground on what was supposed to be a 225 million litre canola biodiesel facility adjacent to Bunge’s canola crushing plant in Fort Saskatchewan, Alta., just north of Edmonton.
The original plan called for the plant to produce fuel by June 2009 but that was before the global economic crisis, which forced many companies to re-evaluate capital projects.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
The Fort Saskatchewan project never made it beyond the site preparation phase.
Canadian Bioenergy Corp. went back to the drawing board and has come up with a new plan, one where it isn’t the sole owner and operator of a stand-alone facility.
Last week, the Vancouver company announced it is pursuing a joint venture with Archer Daniels Midland to build a 265 million litre canola biodiesel plant at the site of ADM’s canola crushing facility in Lloydminster, Alta.
The Fort Saskatchewan project has been placed on the backburner until a feasibility assessment has been conducted on the new venture.
Bunge was contacted for this story but the manager of the Fort Saskatchewan crushing plant declined comment.
Barb Isman, chief operating officer of Canadian Bioenergy, said stand-alone projects have lost their luster in a market with volatile commodity prices and tight credit.
A number of synergies can be realized by integrating the biodiesel plant with the existing ADM crushing facility in Lloydminster, including shared boilers, rail infrastructure, personnel and risk management strategies.
“Even things like fancy head office buildings,” Isman said.
“The idea would be to make as lean and mean and efficient an operation as possible because this is the kind of world that is developing in the United States and globally.”
The plant will use 240,000 to 250,000 tonnes of canola oil annually made from about 600,000 tonnes of locally acquired seed.
Aside from providing the oil, ADM will bring its business expertise to the partnership. The company operates a 322 million litre canola crushing and biodiesel plant in Velva, North Dakota.
“They are already a major biodiesel manufacturer and marketer and that’s a huge advantage,” Isman said.
Both companies will invest in the project, although the details need to be hashed out. There will also be an opportunity for local farmer investment.
“We view that as an integral part of this joint venture,” Isman said.
The goal is to begin construction before the end of 2009 and have the plant operational by Jan. 1, 2011.
However, those dates could change because portions of the feasibility study are beyond either company’s control, such as environmental permits.
Isman said they decided to go public with the new joint venture because some of the work involved in the feasibility study is part of a public process.
“Rather than have this sort of wander into the world, we thought we would do the right thing.”
She said the company wants to be as open and transparent as possible.
If the feasibility study approves the joint venture, it will become the second large-scale biofuel project for Lloydminster, which is home to Husky Energy’s 130 million litre ethanol plant.
“Maybe they could put up a sign, ‘Biofuel Capital of Canada,’ ” Isman said.
Alberta was chosen because that’s where petroleum companies have their blending facilities, which are the end customers for the biodiesel sector.
It doesn’t hurt that a lot of canola is grown in the Lloydminster area and that Alberta and British Columbia both have biodiesel mandates that will be implemented in 2010.
Isman said Alberta’s 14 cents per litre biodiesel subsidy wasn’t the deciding factor. That program expires in April 2011, a few months after the plant’s planned opening.
