Covenant Energy prepares to meet new demand for renewable diesel

By Covenant Energy | March 25, 2021

Covenant Energy, a Saskatchewan-based renewable fuel innovator, is pleased to provide an update on its planned renewable diesel facility. This renewable fuel processing plant which is planned to be constructed in southern Saskatchewan will have the following approximate characteristics:

    •6,500 barrels a day, 300-325 million liters per year of production capacity.

    •Finished fuels including renewable diesel, arctic-grade renewable diesel, and sustainable aviation fuel are all to be produced at this facility.

    •Greenhouse gas emission reductions in the range of 80 to 85 per cent when compared to fossil fuel diesel.

    •Creation of demand for 35 million bushels of canola seed (worth roughly $500 million) to produce 325,000-350,000 metric tons of canola oil feedstock per year.

    •Low greenhouse-gas footprint: recycled hydrogen will be utilized in the production process.

    •Current estimates of local labor market impact include up to 60 permanent full-time positions plus hundreds of thousands of hours of employment throughout the project construction.

Covenant Energy has completed initial pre-FEED engineering and feedstock studies, as well as a marketing, demand, and pricing study. Provided the project receives all the necessary approvals, it is slated to start production in the second half of 2023.

While this project is advancing, it is important to restate that the right demand signal for clean fuels is imperative for the approval of this renewable diesel facility. The federal government's Clean Fuel Regulations, published as a draft in December 2020, would be the key driver of demand for this project and is critical for its success.

Planned with the future in mind, the current design would enable Covenant Energy to invest in doubling the facility production capacity at a later time.

This renewable fuel processing plant would drive demand for approximately 80 per cent of the oil production capacity of a new 1 million metric ton per year canola crushing facility, creating the opportunity for a new crush facility to co-locate with Covenant Energy. Finally, while the ambition is to use predominantly Canadian canola oil as the feedstock and ship renewable fuels throughout Canada and Canada's northern communities, Covenant's proposed location will be situated on a Class 1 railway, giving the ultimate flexibility to access feedstock from across Canada and the U.S., as well as providing the potential to sell product into the U.S. market.

"Covenant Energy is eager to be a part of attaining Canada's environmental sustainability and net-zero commitments in a way that will stimulate the Saskatchewan economy,” said Josh Gustafson, president and CEO, Covenant Energy Ltd. “Personally, being deeply rooted in the Ag industry as a member of a fifth generation Saskatchewan farming family with over 13,000 acres of production, I see the positive future impact and I am excited about bringing value-added opportunities. We are also excited to explore partnership with the oil and gas industry through fuel blending to bring longevity and diversity to a region that traditionally produces other fossil fuels."