A Saskatchewan-based company says it’s growing the idea of building Canada’s first standalone renewable diesel refinery.
Covenant Energy Ltd. president and CEO Josh Gustafson considers himself deeply rooted in the agriculture industry as a member of a fifth-generation farming family and is set on turning prairie-grown canola into jet fuel.
“We see huge potential in the sustainable aviation fuel (SAF) market and I mean, it just sounds crazy to anyone that isn’t in the industry that you can take canola oil and just … make a jet fuel out of it but it’s something we’re very excited about,” he said.
“We see a big … big potential in that (SAF) industry and (it’s) something we’re excited about to see develop in Canada.
“As the industry grows, we see a lot of demand from around the world globally calling for emissions reductions in aviation and in air transport and we see that as something that we can really step into with a short-term solution to create this renewable jet fuel to help cut emissions on the aviation side.”
This renewable fuel processing plant planned to be constructed in the southeast corner of Saskatchewan is proposed to have a production capacity of 6,500 barrels a day or 300-325 million litres per year.
Gustafson said there’s a big difference between renewable diesel and biodiesel.
“(Biodiesel) is closer to a vegetable oil consistency. It still has an oxygen content in it, which gives it some limitations when you want to use it in cold weather and gives it a bit of a limited shelf life. So there’s a bit of constraint there that doesn’t work so well in Canada, in particular, especially with our stretches of seven-day -40 Celsius weather here in Saskatchewan,” he said.
“What you’re doing for renewable diesel is you’re taking that same canola oil from the crushers, but adding hydrogen and putting it into a system with some catalysts and what you’re trying to do is pull out the oxygen.”
“At our facility, in particular, we’re going to be creating an arctic-grade renewable diesel which will be able to run 100 per cent in any diesel engine down to a -40 degree C temperature.”
Covenant Energy said its planned facility creates demand for 35 million bushels of canola seed to produce 325-350 thousand tonnes of feedstock annually.
The Agricultural Producers Association of Saskatchewan (APAS) says the province’s farmers have grown over half of Canada’s canola in the last half-decade, which amounts to an average of 11 million metric tonnes per year.
“This is great news for canola producers because it will give them another option for where they can sell their product,” APAS president Todd Lewis said in a statement to Global News.
“It’s good to see companies recognize the value in constructing a plant which will support our agricultural sector and create new jobs.”
Covenant Energy has estimated the proposed facility’s local labour market impact to include up to 60 full-time positions.
According to Gustafson, the company is looking to join a movement in the renewable fuel industry in Canada with a key driver of demand for the project riding on the federal government’s clean fuel regulations, published as a draft in December 2020.
“Probably the biggest reason why (renewable diesel’s) just taking off now is it took a little bit of time for the policy and the market itself to be set up by the different governing bodies. And in Canada, we’re seeing the clean fuel regulations just starting to get rolled out and that’s probably the biggest trigger for the movement,” Gustafson said.
“The (feds) are going to be implementing it over the next year or so here in Canada.
“In the (United States), the policies were getting put in place and there’s been some significant and rapid advancement in the renewable fuels industry. And so, as with other industries, sometimes Canada is a little bit behind … and we certainly are excited to take advantage of those advancements in the policy and the regulations (here at home).”
Covenant Energy is looking at the Estevan area — which traditionally produces fossil fuels — to be the home of its $500-million facility but added it’s exploring all options to make the final site selection on a railway.
Gustafson said the company is targeting the end of 2023 for initial production, ramping up to full-scale in 2024.