Agreement may result in Prince Albert ethanol plant

By Lisa Gibson
Posted June 4, 2009, at 3:01 p.m. CST

A letter of intent established this week between the Saskatchewan Ministry of Energy and Resources and Iogen Energy and Domtar sets the stage for a potential redevelopment of the Prince Albert Pulp Mill into a cellulosic ethanol plant and bioenergy facility.

Iogen will begin detailed assessment work to develop the cellulosic ethanol plant that will run on cereal straw from local contracted farmers, and determine whether to move forward. If the investment decision is positive, the multi-million dollar project, in partnership with Royal Dutch Shell, will include a power plant producing green electricity from forest and ethanol plant residues, according to the Ministry of Energy and Resources.

Iogen will hold public consultations June 15-17 with communities and First Nations in the area, and proceed with detailed engineering studies and environmental approvals. A timeline for the decision has not been established, according to Mandy Chepeka, director of communications for Iogen.

The pulp mill, owned by Domtar, has been dormant since April 2006, according to the Ministry of Energy and Resources. If the project proceeds, Iogen and Royal Dutch Shell would buy the required mill assets from Domtar. The government would then assume ownership of the remaining mill property and be responsible for existing environmental obligations associated with the decommissioning of the pulp mill site, it said. In exchange, Domtar would pay an environmental settlement fee to the province to compensate for its share of environmental site obligations.

The government also would commit to purchasing the green power produced by the plant if the project goes ahead, and provide new growth tax incentives related to technology commercialization and transportation.

The total cost of the project still is under review, Chepeka said. The ethanol plant would consume about 750 tons of wheat straw per day, trucked to the site, she said, producing more than 70 MMly (18.5 MMgy). The company has yet to determine if the fuel will be sold commercially, she added.

If the project proceeds, it will bring several environmental and economic benefits. "Cellulosic ethanol is a low-greenhouse gas fuel," Chepeka said. It also will provide another stream of revenue for the farmers providing the wheat straw, along with creating 80 to 100 new jobs at the plant itself and even more in "spin-off jobs," Chepeka said, including transportation and baling.