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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2012

Vol. 17, No. 19 Week of May 06, 2012

Canadian biofuels plant scrapped

Royal Dutch Shell and Ottawa-based technology company Iogen have delivered a blow to Canada’s hopes of advancing renewable fuels by scuttling plans for a biofuels plant in Manitoba and laying off 150 people in the process.

The partners said that while pulling back from their larger-scale venture they will continue with a smaller-scale research project to develop cellulosic ethanol from agricultural waste.

Iogen said Shell will “explore multiple pathways to find a commercial solution for the production of advanced biofuels on an industrial scale.”

Iogen has been unable to solve engineering problems that stand in the way of a commercially viable plant.

But it was singled for mention in Canadian Finance Minister Jim Flaherty’s 2007 budget, when the government allocated C$500 million to Sustainable Development Technology Canada to develop next-generation biofuels from agricultural, forestry and municipal waste, rather than corn and wheat to make ethanol and biodiesel.

Shell first invested in Iogen 10 years ago and the partnership has operated a demonstration plant since 2004.

Iogen will still employ 110 people at its Ottawa headquarters to work on expanding new technology for production of biofuels made from cellulose.

The Canadian and provincial governments spend about C$250 million a year to subsidize production of biofuels by major petroleum companies such as Suncor Energy and Husky Energy, estimates think-tank George Morris Center.

Scott Thurlow, president of the Canadian Renewable Fuels Association, said the Shell-Iogen decision does not threaten the future of biofuels production.

“Just like any other fuel, it takes time to build up the necessary capital,” he said.

—Gary Park






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