GATINEAU, Que. – The economic downturn has forced developers of a massive cellulose ethanol plant planned for Birch Hills, Sask., to take a second run at the numbers.
“We’re relooking at the design,” said Brian Straub, president of Shell Canada Ltd.
Shell owns a 50 percent stake in Iogen Corp., an Ottawa company that has been promising to build a large scale, straw-based ethanol plant since 2000.
“We’re working hard. There are some challenges of course with the project …. We’re seeing rising capital costs,” he said.
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The two companies are reviewing engineering plans to make the project more cost effective in a time when oil and ethanol prices are plummeting and credit is becoming harder to secure.
“Together with Iogen we’re making good progress on the design side,” he said.
Jeff Passmore, executive vice-president of public affairs with Iogen, said some progress has been made on the project.
At the beginning of 2008, the company was still considering whether to build its first plant in Idaho, Germany or Saskatchewan.
“Last spring we parked Idaho and Germany and our sole focus is on pushing Saskatchewan over the goal line,” he said during a break in the 2008 Canadian Renewable Fuels Summit.
Iogen has taken options on land in the Birch Hills area and is renewing and extending straw contracts with about 600 area farmers.
But project financing has become a thorny issue.
“We hope to have that all sewed up in 2009,” he said.
Passmore was hesitant to provide a construction timeline because when he has done that in the past, something has come along to push it back, but he said construction should begin in late 2009 or early 2010.
Straub wasn’t as definitive when asked about a start-up date, suggesting the project still hinges on what is contained in the revised engineering plans.
“We’re working hard towards being in a position to take a decision by the end of next year ideally, or perhaps into early 2010,” he said.
The plant will be built in two phases. The first will result in an 80 to 90 million litre facility. The second would ramp up ethanol production to 150 to 160 million litres annually.
The company has applied for the maximum $200 million loan from Sustainable Development Technology Canada, a federal government agency that has been reviewing Iogen’s application since March.
Passmore said the total cost of the project is still up in the air. At one time the company said it would be a $500 million plant.
Straub said the long-term outlook for the biofuel sector is encouraging despite today’s tough economic climate. Shell expects biofuel to account for seven to 10 percent of the global fuel supply by 2050, up from one percent in 2007.
“It’s a sizable opportunity,” he said.
