A shuttered pulp mill at Prince Albert, Sask. could be the new site for a facility to make cellulosic ethanol from farmers' cereal straw.
Saskatchewan's provincial government on Monday inked a letter of intent with Domtar, owner of the pulp mill site, and Iogen, an Ottawa enzyme manufacturer, for the proposed development of an ethanol and bioenergy facility at the P.A. site.
The letter, which states itself to be a "non-binding indication of intent" subject to all parties' formal approvals, calls for Iogen and Domtar to work together on research for "potential redevelopment" of the site.
Iogen, which makes enzymes for the pulp, paper, textile and animal feed industries, has for over a year proposed to build a commercial-scale facility somewhere in Saskatchewan, expanding on its demonstration-scale wheat straw ethanol plant at its Ottawa facility.
The company has already applied for the federal government to foot up to 40 per cent of the bills to build such a facility, through the government's NextGen Biofuels Fund.
At a commercial scale, Iogen's proposed Saskatchewan facility would be the first of its kind, using enzymes to break down cereal straw for production of low-carbon dioxide ethanol automotive fuel.
The proposed P.A. agreement also calls for the use of ethanol plant and forestry industry residues to run a power generation plant at the site, "if the final investment decision is positive," the province said.
Iogen, working with Royal Dutch Shell as its partner on this proposal, expects to make a final investment decision on the project after design and "detailed feasibility work" are completed.
If the project proceeds, the Iogen/Shell partnership would buy any mill assets from Domtar that would be required for the new facility.
The Saskatchewan government would then assume ownership for the remaining mill property and be responsible for "existing environmental obligations" tied to the decommissioning of the pulp mill site.
In exchange, Montreal-based paper processor Domtar would pay an environmental settlement fee to the province to compensate for its share of environmental site obligations.
The letter also proposes that Domtar "endeavour to dispose of" its sawmill at Big River, about 130 km northwest of P.A.
"Redevelopment of this mill site has been a priority for us, for our forest industry and for the people of the area," said Bill Boyd, the province's energy and resources minister and a farmer from Eston, Sask., southeast of Kindersley.
Domtar's pulp mill and related facilities at P.A. haven't operated since April 2006, the province noted.
"A final decision still needs to be made by the company, but this agreement is an important first step in our commitment to find new uses for the mill facilities, new markets for our forest and agricultural resources and new forestry jobs for Saskatchewan people," Boyd said in the province's release Monday.
"A project like this is not only a potential win-win for our forest industry and area farmers, but it also showcases new technology and new approaches by a leading Canadian energy company."
According to the province, Iogen will conduct public consultations June 15-17 with communities and First Nations in the area around the evaluation of the pulp mill site.
Iogen, as per the letter of intent, will also proceed with "design, detailing and development work" and necessary environmental approvals "in preparation for an investment decision." It would also start to arrange financing, subject to company shareholder and board approvals.
The letter of intent proposes to commit the province to "fast-track" permits related to the ethanol project. It further proposes that the province and Iogen would work to analyze the traffic patterns that straw deliveries to the ethanol plant would create, with an eye on a development plan for road safety if need be.
The letter also proposes that Iogen work with the province to set up arrangements with local forestry firms "wishing to invest in power generation as a means of disposing of their residuals," by allowing them to use whatever spare boiler capacity Iogen would have at P.A.
The letter also proposes to commit the province to take responsibility for any liability for "historical environmental conditions" at the pulp mill site, holding Iogen and the project's backers "harmless."
As well, it proposes that the province commit to the purchase of up to 30 megawatts of power from the facility "at a competitive green power price," presumably through the Crown-owned power utility, SaskPower.
A deal to buy the plant's cogenerated power would also include a condition that the existing forest residue piles at the site are processed through the plant's boiler on a "priority basis, where feasible."
"The signing of this agreement is an essential next step for our project in Saskatchewan," Iogen chief operating officer Pat Foody said in the province's release. "It allows us to proceed with the development and assessment work that will provide the needed input into the eventual decision whether to proceed."