Boom times: Green diesel plant could light a fire under canola

strathcona refinery

New renewable diesel facility expected to soak up a lot of canola oil, and fuel major production increases

Alberta farmers could see a huge new market for their canola right in their own backyard — the country’s largest renewable diesel facility.

“It’s exciting news,” said Chris Vervaet, executive director of the Canadian Oilseed Processors Association. “Another market — and a potentially significant market — that drives demand is a boon for the canola industry.

“The potential opportunities are significant.”

Once operational in 2024, the new facility being built by ExxonMobil subsidiary Imperial Oil will produce about 20,000 barrels of renewable diesel a day. It will use local feedstocks such as canola, soy, and camelina oils, said Keri Scobie, manager of Imperial’s Strathcona oil refinery, where the new processing complex will be located.

“It was a pretty exciting day for us yesterday as we announced our plans to move forward with constructing a world-class renewable diesel complex at our Strathcona refinery,” Scobie said on Aug. 26. “It’s the first of its kind initiative for us at Imperial — a technology that we’ve not really used before — so we’re quite excited about what this means.”

The Strathcona site is the logical place to build such a facility, she said.

“It made sense to invest in that facility here,” said Scobie. “We’ve got the expertise. We’ve got the space to build the new facility within our existing fencelines. And we’re close to those local feedstocks that we need for this project.”

There are several ways to produce renewable diesel, which unlike biodiesel, is virtually the same as petroleum diesel in chemical composition. (That means it doesn’t have to be blended and can be used in diesel engines without modifications.) Imperial’s facility will use a process called hydrotreating to create diesel from feedstocks such as canola and soybean oils along with “blue” hydrogen (produced from natural gas via carbon capture).

But it’s too soon to say just what those feedstocks will be and how much will be needed, said Scobie.

“We’re still early days in the project, so we’re still working through a few pieces when it comes to the commercial agreements with feedstock producers,” she said. “Obviously it’s a significant amount of feedstocks to produce 20,000 barrels a day.

“We’re still sorting out exactly what that looks like and where we will source the products we need for this project, but there will definitely be a benefit to the local agricultural industry.”

That’s good news for canola growers across the Prairies, said Vervaet.

“The announcement of capacity build-out for renewable diesel in Canada and in the United States has the potential to be a significant opportunity for canola in terms of providing a low-carbon feedstock supply to these companies that are investing in renewable diesel,” said Vervaet.

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Canola yield gains needed

And that demand is expected to continue to grow as climate change policies force fuel makers to lower emissions.

“It’s policy on both sides of the border that is driving these announcements for more capacity,” said Vervaet. “In Canada, we have the Clean Fuel Standard under development, but in the United States, they’re a little bit further along in the concept of implementing low-carbon fuel standards. California is probably the best example of that, but we see that now really starting to branch to other states in the U.S. adopting low-carbon fuel standards.”

Imperial’s facility is the second such project announced this year.

Federated Co-operatives Ltd. is planning to build a renewable diesel plant at Regina. Details for that facility, which is slated to be up and running in 2025, haven’t been announced but it’s expected to be a similar size to Imperial’s.

And more facilities could be built on the Prairies, said Curtis Rempel, vice-president of crop production and innovation at the Canola Council of Canada.

“Processing close to production is always a good thing,” said Rempel. “It improves the environmental footprint right there. It just makes sense to produce locally.”

Prairie producers will need to increase their production to meet the growing demand for feedstocks — and that’s doable, he said.

“I believe we’re going to be able to grow enough canola — we have the genetic yield potential to do it in our varieties, and we have a favourable climate for growing canola.”

But that increased production isn’t likely to come from increased acres.

“I think there’s the possibility for some more acres — and I stress the word ‘some,’” said Vervaet. “When we talk about increasing production for canola, it’s going to be all about productivity increases and increases in yield.

“The canola industry has demonstrated an ability over the last couple of decades to continue to produce more canola on the same amount of land, and we don’t see that trajectory changing through time. So we are confident and optimistic that we will see more canola production in Canada, primarily based on the increase in yields.”

Rempel agrees.

“There’s all kinds of innovation coming forward, in harvesting and planting, in fertilizer and biologics, in best management practices for a specific farmer in a specific eco-zone,” he said. “It’s kind of my job to be optimistic, but I am optimistic when I look at the investments in R&D, technology, and knowledge transfer.”

Ottawa’s rules a concern

But that increased production relies on having the right inputs readily available — and ultimately, on having favourable regulations around their use.

“We do need to make sure that we have all the proper tools at our disposal so that we do have the ability to increase our productivity,” said Vervaet.

“That includes things like access to fertilizers and other technologies that will ultimately be key to increasing canola yields five and 10 years into the future.”

Restrictions on production practices are already happening in the European Union, but that’s a risk in Canada as well, he said, pointing to Ottawa’s plan to reduce greenhouse gas emissions from fertilizer use by 30 per cent by 2030.

“Emission reductions are part of public policy and there’s a role for the canola sector to play there,” said Vervaet. “But we need to make sure that any sort of target that does lead to emission reductions doesn’t limit our access to fertilizers. Fertilizers are an important tool for increasing our productivity.”

It will also depend on how the Clean Fuel Standard plays out.

Right now in Canada, roughly 500,000 tonnes of canola are being used in biofuels as a result of federal regulations that mandate a two per cent blend of biofuels in diesel.

The Clean Fuel Standard, which will start coming into effect next year, could see that blend rate increased. Upping it to five per cent would increase use to 1.3 million tonnes of seed, says the Canadian Canola Growers Association. That’s what Canada sold to Japan (our No. 2 customer) in the last crop year.

But the Clean Fuel Standard in its draft form contains sustainability criteria and additional documentation requirements, and that could be a barrier to creating a strong demand signal for the canola industry.

“We see the Clean Fuel Standard as something that holds significant potential, but the horse is not in the barn yet,” said Vervaet.

“Recognition of farmers’ practices here in Canada and in the United States as being fully sustainable is an important piece of that Clean Fuel Standard that needs to be fixed before we even see any of this new demand come online.

“But at the moment, the Clean Fuel Standard still has potential, and we need to make sure that, over the next year or so, we do get some of those details right.”

Companies like Imperial Oil are already preparing for those changes, said Scobie.

“Canada is moving to net zero by 2050, and this is really an opportunity for Imperial to continue to do our part in this space,” she said. “We think it’s really important from a clean energy future perspective and from a sustainability perspective. It’s the right thing to do.”

And Canada’s canola industry is preparing for it too.

“We already have a $30-billion contribution to GDP because of all of the value-added processing, and I think this is just going to keep that trajectory going,” said Rempel. “It’s headwinds for the canola industry.”

About the author

Reporter

Jennifer Blair

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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