by BETTER FARMING STAFF
Two companies looking into the possibility of jointly establishing an oil crushing facility in Ontario’s southwest will have their answer early next year.
Suncor Energy and Chatham-based Agris Co-operative will likely decide by February whether to proceed with the project, says Agris’ general manager, Jim Campbell.
If the plant goes ahead, it will cost $110 million to build and have a capacity to process 1,000 metric tonnes. “It’s a competitively-sized plant,” says Campbell, noting it will process corn and soybean oil.
On Friday, the companies announced a $160,000 study to examine operating arrangements, construction development, division of responsibilities as well as the feasibility of the proposed technologies.
“It’s a first of a kind,” says Campbell. The companies have also worked together to develop a business plan.
Two sites are being considered but Campbell admits there are “a lot of logistical advantages” to locating near Suncor’s St. Clair ethanol plant in Lambton County.
Suncor spokesman Jason Vaillant agrees, noting Suncor is expanding its plant and has plans to double production to 400 million litres a year by late 2009. Although the downturn in oil prices has affected ethanol production, “there’s still a market for ethanol in Ontario,” he says.
One of the crushing facility’s key functions would be to extract oil from the corn germ to streamline ethanol production. Ethanol doesn’t use oil, Campbell explains. “It’s a problem for an ethanol producer.” Extraction would occur before ethanol production begins.
Campbell says the facility would be a “fairly small soybean handler,” focusing on niche and emerging markets for oil such as biofuel as well as bioindustrial and heart healthy uses.
“Those are segments that are looking for specialized types of oils that come from specialized types of soybeans,” he says. “We’re really looking to identity preserve these traits right from the bag of seed through to the oil that would go to an industrial user.”
By January, the companies will have spent $400,000 on studies. About half of the funds have come from third party sources, including the Ontario Soybean Growers as well as federal and provincial government programs.
“We’re still pretty preliminary,” says Campbell. “For a plant this size it takes a lot of study.”
He says the current financial climate has tightened access to capital. “We are definitely going more slowly, more cautiously than we might have thought we would have been six months ago.”
Al Mussell, a senior research associate with the Guelph-based George Morris Centre, says the presence of a crushing facility will be nothing but good news for area farmers.
It should help to increase local soybean prices and lower the costs of buying soybean meal, he says. BF