Alberta biodiesel refinery's output set to double
WINNIPEG, Manitoba, Oct 15 (Reuters) - Canadian Bioenergy Corp. plans to build a refinery near Edmonton, Alberta, that by mid-2009 would have the capacity to produce 225 million liters (60 million U.S. gallons) of canola-based biodiesel, its chief executive said on Monday.
The C$90 million ($92 million) plant will be twice the original capacity planned by the privately held Vancouver, British Columbia-based company, which imports and distributes biodiesel, Doug Hooper said.
"The scale of the opportunity and the scale of the feedstock and the situation with the petroleum industry just suggested to us that we should build a global-scale plant here," Hooper said in an interview from the plant site.
The company owns land at Fort Saskatchewan, Alberta, adjacent to a canola crushing plant owned by Bunge Ltd. (BG.N), the world's largest oilseed processor.
Hooper said the company aims to source some of its canola oil from the Bunge plant, but will also buy from others.
The company expects to receive local and provincial permits in next three weeks, allowing it to prepare the ground before winter freeze-up. It plans to start construction in spring.
The site is close to major canola-producing areas as well as to petroleum customers in Canada's oil patch, Hooper said.
Hooper said he hopes the site's proximity to the provincial capital of Edmonton will ease the challenge of finding construction workers in Alberta's overheated labor market.
The company decided to double its planned capacity because it expects provincial and federal renewable fuel standards will create a market of 750 million liters of renewable fuel for diesel by 2010.
The plant will consume the equivalent of about 5 percent of Canada's canola crop, Hooper said.
Canola prices have soared by close to 40 percent over the past year, recently rising to three-year highs at the Winnipeg Commodity Exchange RSc1.
Prices have climbed because of crop problems in Australia and Europe, as well as overall strength in world grain and oilseed prices, caused partly by emerging demand for biofuels.
Hooper said he believes the market will ease by the time his plant is commissioned.
"Historically... it's one of the environments where the solution to high prices is high prices, and farmers will react and plant accordingly," he said.
In April, private equity firms Riverstone Holdings and Carlyle Group and privately held Dominion Energy LLC announced plans for a C$400 million biofuel-refining complex at the central Alberta town of Innisfail.
The plant would have the capacity to produce 378 million liters (100 million gallons) each of ethanol, canola oil and biodiesel, and its owners hoped to begin production in the fall of 2008.
($1=$0.98 Canadian)
