CALGARY — Vancouver-based renewable fuel supplier Canadian Bioenergy Corp. is considering building a biodiesel plant in Lloydminster, with major U.S. crop processor Archer Daniels Midland Co.
The plant, which would produce 265 million litres of canola-based biodiesel per year, would be located at the site of ADM’s existing canola crushing plant, Canadian Bioenergy announced Tuesday.
A final price tag for the plant has not yet been worked out, chief executive Doug Hooper said.
“What we do know, though, is that it’s quite a bit more capital and operating cost-efficient to integrate a plant within a canola crushing complex,” he said.
The company is planning a standalone 225-million-litre-per-year plant near Edmonton at an estimated cost of $90 million.
It will wait until the Lloydminster feasibility study is complete before making a decision on going ahead with the Edmonton-area one.
“It’s quite an improvement by virtue of getting those synergies,” Hooper said.
Much of Alberta’s construction activity has ground to a halt, as energy companies facing deteriorating economic conditions scale back or cancel their plans to build oilsands upgraders, refineries and petrochemical plants.
But Hooper said there are advantages to breaking ground on a new project during a recession.
“There’s some softness in the labour market that both gives you access to the best crews as well as keeps some containment on the labour costs,” he said.
The cost of steel and other construction materials is also down.
And the lower Canadian dollar means it will be easier to export the biodiesel to the United States.
On the flipside, getting access to financing has been tough for many companies during the credit market freeze.
“That will definitely be one of the more challenging implications of the recession and the economic downturn,” Hooper said.
“We’ll be looking at primarily the equity markets, I think, for financing this project.”
Ottawa and many provincial governments have embraced biofuels as part of their strategies to cut down on greenhouse gas emissions, but that approach has been controversial.
Critics say using crops to make fuel drives up the price of food, and some have wondered whether biofuels are even effective in fighting climate change since they require so much energy to produce.
Manitoba, Saskatchewan and Ontario have already implemented their own renewable fuel standards, and new rules are set to come into effect next year in Alberta and British Columbia.