Giant biofuel plant planned; $400M Alberta project National Post Wed 18 Apr 2007 Page: FP2 Section: Financial Post Byline: Geoffrey Scotton Dateline: CALGARY Source: CanWest News Service Edition: National Story Type: Business Length: 710 words CALGARY - A site north of Innisfail, Alta., will be home to North America's largest biofuels refinery starting this summer when construction begins on a $400-million plant that will produce 300 million U.S. gallons per year of ethanol, biodiesel and crushed canola. Dominion Energy Services, LLC along with New York-based private-equity affiliates Riverstone Holdings LLC and The Carlyle Group yesterday formally announced plans for a 160-hectare site outside of Innisfail for the project. "The rail infrastructure is massive; that's why we needed so much land," said Curtis Chandler, Dominion president and chief executive. "We have to be able to take unit car trains in, which are 111 cars, to cut down on our transportation costs." The project has been under review by Alberta Environment since March and approval is expected in May,Mr. Chandler said. "We're deeply into the permitting stage. We've had our permits for a month and a half and we're expecting [environmental] approval in May," Mr. Chandler said. "I'm very excited. It will be the largest facility in North America." Dominion is a Florida-based firm with links to Calgary's natural- gas industry -- Mr. Chandler and his father, Bruce, built the Alberta Hub natural-gas storage facility near Edson -- and alternative- energy investments in Central Canada. Riverstone-Carlyle is one of the largest U.S. private-equity firms with US$56.1-billion under management. In March, 2006, it purchased the natural-gas storage assets of Calgary-based EnCana Corp. in a US$1.5-billion deal. "The rail access, close proximity to large quantities of feedstock and skilled local workforce made Innisfail an ideal location for our newest venture with Dominion Energy," said Stephen Schaefer, Riverstone's managing director. "Biofuels are taking an increasing role in helping North America reduce our dependence on fossil and foreign fuels," Mr. Schaefer added. Ken Graham, Innisfail's Mayor, said on Monday the project will give a major boost to his town, 116 kilometres north of Calgary on Highway 2. The plant is expected to create 400 construction jobs over the 12- to 16-month planned construction period and 90 full-time positions once the plant is fully operational by mid- to late-2008. About 200 indirect jobs will service the plant and its employees. "There's going to be a lot of spinoffs, jobs, shopping in town. It will be good for the community," Mr. Graham said on Monday. "It's going to be a big, big project and I suspect there are going to be spinoff industries locating around it. It's going to be great for the farmers as well," he added, noting the facility will use wheat and canola as feedstocks. When completed, the plant will be among the largest employers in the Innisfail area, joining the ranks of facilities owned and operated by companies such as insulation maker Johns Manville Canada Inc., pet products manufacturer Nestle Purina Canada Pet Care Canada Inc. and oilfield-machinery maker NWP Industries Inc. (Northwest Pipe and Supply Co.). The facility will include a 100 million-U.S.-gallon- or 374-million- litre-a-year ethanol plant, a similar-sized canola crush operation and a 374-million-litre-peryear biodiesel refinery. It will also produce animal feed, canola meal and is designed to capture its carbon dioxide emissions for use for injection to enhance oil and gas recovery. Dominion and Riverstone/Carlyle are taking advantage of growing public interest in alternative fuels and expanding government financial and regulatory support for the production and consumption of ethanol and biodiesel. In March, Ottawa announced a $2-billion package of support for ethanol and biodiesel projects and technology, while Alberta has launched a $239-million bioenergy program. The Innisfail facility will receive a 14ยข-a-litre subsidy through an Alberta producer credit program. Other firms have plants in the works as well, including CR Fuels Inc., which plans a $275-million biofuel complex near Strathmore, and Canadian Bioenergy Corp., which plans to turn out 114 million litres of biodiesel from its $65-million Fort Saskatchewanarea plant by next year. Biostreet Canada Inc. hopes to turn out 175 million litres a year from a central Alberta location. Currently, Permolex Ltd. operates a 12 million-litre-a-year ethanol plant in Red Deer, Alta., and Husky Energy Inc. of Calgary has built a $110-million, 130-million litre-a-year ethanol plant in Lloydminster, Sask. Last December, Ottawa mandated a 5% renewable-fuel content for transportation fuels by 2010 and a 2% content mandate for diesel and heating oil by 2012.
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