Federated Co-operatives announced Thursday it had signed a memo of understanding with Calgary-based ‘clean energy’ company Whitecap Resources, in which the latter company will store and use carbon dioxide (CO2) emissions captured from Federated Co-op’s fuel plants.

The two companies’ planned operating agreement calls for emissions captured from the Co-op Refinery Complex at Regina — and from the Co-op Ethanol Complex (CEC) wnear Belle Plaine, about 40 km west of Regina — to be transported to and stored at Whitecap’s unit south of Weyburn for later use.

Whitecap’s Weyburn unit is billed as “the single largest anthropogenic carbon sequestration project in the world,” having so far captured over 36 million tonnes of CO2.

The deal calls for FCL to “fund, construct and operate” facilities at its Regina and Belle Plaine plants that would capture almost 500,000 tonnes of carbon dioxide equivalent per year for transport to Weyburn.

FCL, in its release, didn’t give a price tag for its project but Reuters on Thursday quoted the co-operative’s total spend at about $510 million.

FCL said it expects its carbon capture facility at Belle Plaine to be completed in 2024, and commissioning at the Regina refinery starting in 2026.

That said, “final investment decisions” on FCL’s projects will need “clarification” on climate change regulations and incentive programs “that support our transition to the low carbon economy.”

“Today’s announcement firmly positions Saskatchewan as a world leader in innovative carbon capture technology and is just the beginning of significant private investment opportunities in the CO2 sequestration value chain,” provincial Energy and Resources Minister Bronwyn Eyre said in FCL’s release.

“This proposed project will include CO2-enhanced oil recovery, which lowers GHG emissions by 82 per cent compared to traditional extraction methods while increasing production.”

The Weyburn unit Whitecap now owns was discovered in the 1950s and produces mainly light oil. “Waterflood” operations followed in the 1960s and CO2-enhanced oil recovery began in 2000.

“The transition to a low-carbon economy is one of the largest, but most necessary, shifts we’ll have to make in our long history,” FCL CEO Scott Banda said in the same release.

“Carbon capture and the work we’re doing with Whitecap is just one of multiple paths we’re exploring as part of a strategic plan to integrate sustainable solutions into our operations to improve environmental performance.”

Federated Co-op’s CEC, known as Terra Grain Fuels up until March this year, has operated since 2008, came to FCL in 2019 and today produces about 150 million litres of ethanol per year for blending at the Regina fuel refinery, along with 130,000 tonnes of dried distillers’ grains (DDGs) for livestock.

The Belle Plaine CEC’s ethanol feedstocks include about 350,000 tonnes per year of wheat and other “starch-rich” crops such as corn, rye and triticale bought from about 400 Prairie farmers. — Glacier FarmMedia Network

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Glencore Agriculture’s Viterra arm said Tuesday it has signed a purchase deal for the assets of ILTA’s processing facility at Belle Plaine, Sask., about 25 km east of Moose Jaw. Financial terms of the deal weren’t released.

The deal is expected to close Aug. 27, subject to the usual closing conditions as well as approval from the Supreme Court of British Columbia. That approval will be sought at a hearing Friday, Viterra said.

Surrey, B.C.-based ILTA started building the Belle Plaine plant in 2015, describing the site as “the heart of a major specialty grain production area and well positioned from a transportation perspective.”

Completed in 2017, the facility is connected to Canadian Pacific Railway’s mainline, with a 135-railcar loop track and storage capacity of 22,000 tonnes.

According to ILTA’s court-appointed monitor, PricewaterhouseCoopers (PwC), the site has capacity to process about 350,000 tonnes of crops per year.

Regina-based Viterra on Tuesday said the site “can handle a wide range of pulses and other commodities, and provides added value through precision cleaning and conveyor equipment to prepare and ship crops for export.”

The Belle Plaine operation, built on 350 acres, also has “multiple logistics capabilities including container, bagged, intermodal, truck and bulk rail shipments,” Viterra said.

“We firmly believe that our operational and logistical expertise, combined with our focus on superior service and unrivalled market insight, will allow us to bring this facility to its full potential for the benefit of our customers,” Kyle Jeworski, Viterra’s CEO for North America, said in Tuesday’s release.

Viterra’s facilities nearest to Belle Plaine include an elevator just west of Moose Jaw and a dedicated mustard plant in that city.

‘Broader process’

ILTA entered creditor protection on July 8, citing falling revenue due to “increasingly challenging international trade conditions,” as customer countries such as India, China and Saudi Arabia limited or halted imports from Canada.

PwC, in its Aug. 1 report to the court, said it had been working with a party which, prior to ILTA’s creditor protection filing, submitted a letter of intent to buy the Belle Plaine site. The report didn’t mention Viterra by name.

PwC’s report said the plan was to either “meaningfully advance” a deal with that buyer for the Belle Plaine site or add it to the “broader sales process” for ILTA’s five other plants.

Ontario-based Hensall District Co-op in January closed a deal to buy ILTA’s plant at Bloom, Man., about 15 km west of Portage la Prairie. Hensall later said it would also exercise its previously agreed-upon option to buy ILTA’s receiving station at Miami, Man., about 85 km south of Bloom.

That deal closed July 24, after ILTA’s secured lenders confirmed they had no interest in the Miami site, PwC said.

Interest from potential buyers in deals for ILTA’s other assets “has unfolded in a positive manner,” PwC said in the Aug. 1 report, noting plans for a “non-binding bid deadline” of Aug. 26. — Glacier FarmMedia Network

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“The decision to file for (Companies’ Creditors Arrangement Act protection) was made after careful consideration and in our view, is a necessary step for the company to address its financial structure, protect all stakeholders and secure additional financing to fund the continued development of our business,” ILTA CEO Dan Burneski said in a letter to grain suppliers dated Tuesday.

An affidavit filed Sunday with the court noted “increasingly challenging international trade conditions” in recent years affecting ILTA’s business in export markets including India, China and Saudi Arabia.

Current management will continue to operate the business and will lead the restructuring process, the company said.

According to Pricewaterhouse Coopers Inc. (PwC), the court-appointed monitor, ILTA will seek court approval Friday for interim financing and authorization to start a sales process for its assets and operations.

Surrey-based ILTA, in business since 2011, remains in control of its property and operations in the meantime, but under PwC’s supervision.

All balances outstanding prior to Monday’s filing date are stayed and will not be paid by the company, according to Burneski’s letter.

Sunday’s affidavit lists HSBC Bank Canada, Export Development Canada and Farm Credit Canada as secured creditors.

Steps are underway to work with the Canadian Grain Commission “to protect producers’ rights, realize on their security and help our suppliers through the claims process to recover these amounts,” the company said, and questions on the claims process should be directed to the CGC.

As a result of the CCAA filing, all creditors are stayed from commencing or continuing any proceedings against the ILTA Group until Aug. 7, subject to any extensions of the initial stay the court might grant.

The company’s Saskatchewan facilities include sites at Saskatoon, Swift Current, Belle Plaine, Cut Knife and North Battleford, which is also the site of the company’s processing head office.

ILTA previously had an edible bean processing plant at Bloom, Man., near Portage la Prairie, and a satellite receiving operation at Miami, Man., but sold both in January to Ontario-based Hensall District Co-operative.

Sunday’s affidavit also noted “informal” moves had recently been made to put ILTA’s Belle Plaine plant up for sale. –– Includes files from Glacier FarmMedia Network staff

Correction, July 11, 2019 — A previous version of this article incorrectly stated ILTA still operated at Miami, Man.

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FCL announced Wednesday it will buy the Terra Grain Fuels ethanol plant in the RM of Pense near Belle Plaine, about 25 km east of Moose Jaw, for an undisclosed sum.

TGF, owned by local investors and producers, has capacity to produce about 150 million litres of ethanol per year, requiring over 400,000 tonnes of grains and “starch-rich” crops from over 400 growers and producing up to 160,000 tonnes of dried distillers grains (DDG).

Cal Fichter, FCL’s vice-president for energy, said the deal, expected to close by the end of the month, “prepares us to meet the incoming national Clean Fuel Standard” while allowing local co-ops to provide transport fuels to members to meet existing renewable fuels standards.

The Co-operative Retailing System, which provides central wholesale services to FCL’s 200-odd member co-ops, currently includes 780 gas bar and card lock locations across Western Canada.

FCL on Wednesday also pledged to invest in “making the (TGF) plant more efficient and pursuing carbon capture and storage technologies.”

FCL said it will continue to operate TGF with its current staff of 45 employees, and the TGF business will also continue “working directly with all of its existing clients and partners.”

“This is a big win for TGF, FCL, the province of Saskatchewan and all of our stakeholders,” TGF president Calvin Eyben said in the same release. “To our valued customers, suppliers and other business partners, it will be business as usual for TGF and we don’t anticipate any interruptions during this transition period.”

Built starting in 2006 at a cost of about $130 million, TGF has been producing ethanol since 2008, contracting mainly for high-starch, low-protein such as CPS reds and whites, soft white wheats and winter wheats. The company currently bills itself as the largest wheat ethanol plant in North America. — Glacier FarmMedia Network

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The company raised its estimate for 2016 capital expenditure to 17.9 billion Norwegian crowns (C$2.8 billion) from previous guidance of 14.5 billion, and predicted a decline to 10 billion in 2017 and seven billion the following year.

In 2015, Yara’s capital expenditure was 14.4 billion.

“We believe growth is key to creating further shareholder value, and sustaining and growing our competitive edge. Also, improving our relative cost position and productivity is a key priority,” CEO Svein Tore Holsether said in a statement.

“During the next six months we will establish a corporate improvement program, consisting of several initiatives aimed at reducing cost and increasing efficiency,” it added, without elaborating.

Yara’s Canadian holdings include Yara Belle Plaine — the former Saskferco nitrogen fertilizer plant at Belle Plaine, Sask., east of Moose Jaw — and a deep-water dry fertilizer terminal northeast of Montreal at Contrecoeur, Que.

Yara presented two main scenarios for its earnings per share, ranging from 35 Norwegian crowns in the first to 57 (C$8.84) in the second, and with the potential to add six to seven crowns per share by 2018 under the company’s growth plans.

Both were ahead of Yara’s reported earnings per share for 2015, which rose to 29.38 crowns (C$4.56) from 27.59 in 2014.

“The scenarios are not a prediction of future results, but are ‘what if’ examples based on selected fertilizer and energy price scenarios and Yara’s current business,” it added.

— Reporting for Reuters by Terje Solsvik.

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