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Posted on  

October 25, 2002

$30-M ethanol plant proposed for Russell

By Helen Fallding
Winnipeg Free Press

Russell could be the first community in Manitoba to get a new ethanol plant under the Doer government's plan to force drivers to fill up with ethanol-blended gasoline.

Another proposed plant, to be located between Dauphin and Roblin, was announced last week, and Manitoba's only existing ethanol plant in Minnedosa is considering expanding -- all in an effort to meet the potential demand for 14 times as much ethanol as the province currently manufactures.

Manitoba Biorefiners, a new company backed by Alberta's Canadian BioEnergy, expects to file an environmental licence application for the $30-million Russell plant within a couple of months, BioEnergy president John McCook said.

The company had already lined up a contract to sell the grain-based fuel in the United States, but put that plan on hold when Premier Gary Doer announced this spring that he plans to mandate the use of gasohol -- a blend of gasoline and 10 per cent ethanol.

"We could save the freight costs by selling it locally as opposed to shipping it to the States," McCook said.

A government-appointed panel has completed a round of consultations on how to implement the mandate, which could create a new grain market for almost 15 million bushels of wheat -- a tenth of Manitoba's production.

McCook said the viability of his project will depend on whether the province designs regulations that give smaller players a chance.

The NDP's push for more ethanol production is meant to promote economic development in rural communities while helping the province cut greenhouse gas emissions related to climate change.

Expanding ethanol production would also give wheat farmers another market for their grain and provide high-quality livestock feed as a co-product.

The Russell plant is expected to produce about 24 million litres of ethanol a year, compared to the 80 million litres a year a Toronto company hopes to produce near Dauphin.

The joint venture between Outlook Resources and the Parkland Agricultural Resource Co-operative was announced last week, but the proponents of that proposed plant are only at the feasibility study stage.

The Russell plant, west of Riding Mountain National Park near the Saskatchewan border, could be in operation by spring 2004, McCook said.

A feasibility study was completed long ago, a business plan has been developed and most of the financing is in place, he said, although he would not name investors.

The project is expected to create about 40 jobs, including some connected to a 20,000-head cattle feedlot using byproducts of ethanol production.

McCook said some ethanol plants dry the distiller's grain to sell to the dairy industry, but the price will drop as more ethanol plants come on line.

Manitoba's only ethanol plant in Minnedosa produces about 10 million litres a year, but the province will need 140 million litres a year if the use of gasohol becomes mandatory.

Outlook Resources president John Bottomley said there is room in Manitoba for several plants, considering the export market in Ontario and the United States. The owners of Minnedosa's Mohawk plant are also considering an expansion.

Bottomley wants to use waste heat from boilers in the proposed plant between Dauphin and Roblin to heat year-round greenhouses.

The Saskatchewan government's decision to invest up to $20 million in three new ethanol plants is proving controversial, but McCook is not expecting the Manitoba government to make an equity investment in the Russell project.

He said he has approached the province about loans, while Bottomley hopes to get some help with things like highway access for the Dauphin-area plant. The Parkland co-operative might seek government help for its $2.5-million investment in that plant.

After researching sites in Atlantic Canada, Outlook chose western Manitoba because farmers there produce more grain than they need. Bottomley said the area south of Winnipeg has too much competition for grain from the livestock industry.

He said the company was also drawn by Manitoba's low electricity costs and its central location, which will make it easier to export across North America.

Manitoba has one of the best provincial tax incentives for ethanol produced and consumed in the province, Bottomley said.

The Doer government is waiting for a report on the consultations before making a final decision on the mandate and whether to restructure its 2.5-cent-a-litre gasohol subsidy.

"I'm not in favour of them mandating it simply for the sake of taking away the subsidy that they're currently offering," Bottomley said.
 

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