Minot, North Dakota, is getting a $50 million biodiesel plant that could have been built somewhere on the Canadian Prairies, say the project
developers.
The plant, which will consume an estimated 250,000 tonnes of canola seed, should be under construction this summer and fully operational by fall 2006.
Funding for what will be North America’s largest biodiesel facility came through a combination of private investment and enticements from federal and state governments.
“The incentives for creating such businesses in the U.S. is a better environment at the moment than any of the Canadian provinces that we have talked to and who basically said, ‘don’t call us, we’ll call you,’ ” said Skip Hauth, president of North Dakota Biodiesel Inc.
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His firm, Biodiesel Management Inc., tried to coax matching investment dollars, tax credits and biodiesel mandates out of prairie provinces to no avail.
In the end the company decided to locate its plant in a state that grew 756,000 acres of canola in 2004 instead of a province like Saskatchewan, which seeded 6.1 million acres of the crop.
“I think the Prairies ought to be hungry for business but I don’t see them stepping up,” said Hauth.
Bob Ellis, spokesperson for Saskatchewan Industry and Resources, confirmed the province spoke to Hauth’s group but refused to divulge details of those conversations other than to deny Hauth’s accusation that Saskatchewan is resting on its laurels in luring alternative fuel initiatives.
“We feel that we are a leader in ethanol development,” said Ellis, pointing to two major ethanol projects under construction in the province Ñ NorAmera BioEnergy Corp.’s 25-million-litre facility in Weyburn and Husky Oil Operations Ltd.’s 130-million-litre plant in Lloydminster.
“Both of those are proceeding without any (provincial) government funding in them,” he said.
A provincial ethanol mandate requiring all gasoline sold to be blended with ethanol has been drafted and is ready to be implemented once the supply from those two plants comes on tap early next year. Nothing similar is pending for Saskatchewan’s biodiesel sector, which comprises two small-scale plants.
“We’re working with local groups and out of (those discussions) may come some policies in that regard. But it’s still early stages on biodiesel,” said Ellis.
That is the kind of shortsighted and conservative policy approach that is hurting the province, said Hauth, adding that Saskatchewan and Manitoba need to become more proactive in developing strategies for emerging sectors.
“We’ve been working for two years to try and get somebody from the Canadian side of the border to say something besides, ‘we don’t really know if this is real. We’re not really sure how to go about it.’ “
He said the Minot plant is proof the biodiesel sector is real, a concept that politicians south of the border seem more willing and able to grasp.
North Dakota committed an unspecified amount of equity to the project and is mulling over legislation that would mandate biodiesel use in the state’s vehicle fleet and a two percent blend in diesel sold at gas stations.
That enthusiasm was matched on a federal level when late last year U.S. president George Bush signed into law a bill providing a federal excise tax credit amounting to a penny per percentage point of biodiesel that is blended with petroleum diesel. So a B20 blend would fetch a 20 cents US per gallon credit, making the blended fuel price-competitive with regular diesel.
Hauth said those kinds of attractive incentives give the United States a huge lead on Canada when it comes to luring alternative fuel projects.
That’s a shame, said Brad Hanmer, president of the Saskatchewan Canola Growers Association and chair of the Biodiesel Association of Canada. He laments the lost opportunity for his home province.
“We need to be leaders. Well, we’re really not going to be now, are we? That’s going to be in Minot.”
The North Dakota Bio-diesel plant announcement is a blow to the canola industry’s plans to develop a local biodiesel sector. The plant will single-handedly be able to provide all of Saskatchewan’s short-term needs for the alternative fuel.
“It’s not going to be as easy for us to build a plant of this magnitude in Saskatchewan. Not to say it’s not going to happen, because it will happen and it’s going to happen, but this has put (those plans) back slightly.”
On the bright side, the Minot plant could spark demand for biodiesel and it represents another delivery opportunity for Canadian canola growers, said Hanmer.
“I wish it was in my back yard, but we’ll take it.”
It also demonstrates that canola-based biodiesel is superior to soy-based product.
Hauth said his firm wanted to “get an oar in the water” with a premium product. He said while soy-based biodiesel is good, canola-based biodiesel outperforms other oilseeds under difficult winter conditions.
Company projections indicate a need for up to 35 more 100,000-tonne biodiesel plants in North America over the next five years.
Most of those would be soy-based plants but there is room for three more Minot-sized canola plants. It only makes sense to build the next one near a city such as Winnipeg or Regina, said Hauth.
Each plant requires an estimated 355,000 acres of annual canola production and North Dakota, which is the only major canola-producing state in the U.S., is already tapped out.
But before that happens prairie governments have to evaluate their policies on alternative energy and value-added projects, said Hauth.
Ellis said Saskatchewan is working with Ottawa to develop a federal response to U.S. biodiesel legislation and he didn’t rule out the possibility of a crown corporation like Investment Saskatchewan sinking money into a canola-based plant.
“Certainly we’d be pleased to talk to them,” he said.
