Brian Zinchuk is editor and owner of Pipeline Online
REGINA – When Federated Co-operatives Ltd. (FCL) announced in November that they would be building a renewable diesel facility adjacent to the Regina Refinery Complex, an open question was where they would be getting the canola oil feedstock from?
On Jan. 17, that question was answered, for at least half of it. FCL and AGT Foods and Ingredients Ltd. announced a memorandum of understanding for their intentions to build a $360 million canola crush plant adjacent to the planned renewable diesel facility. It would be through a joint venture, with FCL owning 51 per cent and AGT owning 49 per cent. The plant would handle 1.1 million tonnes of canola per year to produce 450,000 tonnes of canola oil. That, in turn, will supply approximately 50 per cent of the feedstock required for the renewable diesel plant, whose daily output will be 15,000 barrels per day.
The canola crush plant and renewable diesel facility will be part of what FCL and AGT are referring to as the Integrated Agriculture Complex (IAC), north of the refinery.
They’re looking at having the renewable diesel plant operating by 2027, and the canola crush plant before that, but FCL CEO Scott Banda wouldn’t offer more detail. “If the landscape changes, there is some opportunity to advance that schedule,” he said.
Banda and AGT Food president and CEO Murad Al-Katib made the announcement through a videoconference. They were joined by Premier Scott Moe and Regina Mayor Sandra Masters.
FCL CEO Scott Banda. Screen capture
Banda said, “I’m very pleased today to announce a historic investment for Co-op, for the province of Saskatchewan and for Western Canadian producers. FCL has plans underway that will lead to a $2 billion investment in the construction of an Integrated Agricultural Complex in Regina, Saskatchewan. This new complex represents another step in our strategy to adapt to the challenges of the low carbon economy. And it will ensure that we are producing the transportation fuels to meet consumers needs while creating jobs, economic prosperity, and value-added agricultural production for the benefit of the over 600 communities that Co-op serves across Western Canada.”
“This new complex contains two components, a renewable diesel fuel plant and a canola crushing facility,” he said, noting the canola crush plant is the second part of a $2 billion investment FCL is making in the construction of an Integrated Agriculture Complex (IAC). The Jan. 17 announcement builds on FCL’s November announcement to advance plans to construct a renewable diesel facility in the Regina area.
The construction phase of the IAC will create an estimated 2,750 jobs and, once complete, could potentially create up to 300 permanent jobs. In terms of economic impact, the gross economic output of the complex will be an estimated $4.5 billion. This estimate includes all economic realizations associated with the facility, according to FCL, which noted the IAC investments are subject to continued due diligence as well as environmental, regulatory and board approvals.
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Banda said, “As we know, there are many synergies between the production of renewable transportation fuel and agriculture. And we believe our Co-operative Retailing System is well-positioned to integrate and capture the full agricultural value chain in the production of fuel and value-added products. We look forward to providing producers with another marketing opportunity for their canola crops and expanding our relationship to more fully support the agriculture sector, from seed to fuel tank; or a farm to fuel strategy.”
He called the Integrated Agricultural Complex “a game-changer.”
“This new complex ultimately provides our owners with an opportunity to build even stronger relationships with their customers and producers while strengthening Co-op’s economic impact our long-term sustainability and our commitment to community as we build sustainable communities together.”
What do you do with the canola meal?
Banda said AGT is a perfect partner, as it has “become a fixture within the Saskatchewan agricultural landscape, and their expertise and grain procurement and global grain distribution is of critical importance to the success of our joint venture. Additionally, their knowledge and passion for the plant protein sector, and their innovative approach to value added opportunities for canola meal make them an ideal partner. And that’s an important part of this project, what will we do with the canola meal?”
To that end, AGT’s Al-Katib explained there are several options, including using it for fish food for salmon, tilapia and shrimp.
AGT Foods & Ingredients president and CEO Murad Al-Katib. Screen capture
“We’re really good at protein and that again is part of the vision here is to up the value of the meal to create even more opportunities for communities,” he said.
“We ultimately are going to be taking that meal and we’ll be looking at opportunities for extraction of protein, utilization of that protein in combination with potentially pulse proteins and other ingredients to go back into the human that food supply chain. And we take canola protein and pulse protein together, the complementarity of that gives you a much more digestible and complete protein that is much more bioavailable to the humans that consume it.
“And it’s very suitable for aquafeed and things in terms of farmed salmon, tilapia and shrimp production. We think the food systems in the world are looking for sustainable ingredients that have an environmental footprint that are beneficial,” Al-Katib said. “We’re ultimately going to put this back into high value use in the food systems, we think again, generating even more food to close that food gap on both population growth and middle-income growth around the world.”
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Al-Katib said, “There’s a demand for quality plant-based protein, environmental stewardship and cleaner energy. And with a sustainable three-crop rotation in Canada with canola, pulses and wheat the fields of Western Canada’s farmers are akin to the oil fields of oil-producing nations, but our fields renew annually with each new crop.
“The fields of canola provide the source for production and renewable fuels. They are renewable themselves, and contribute positively to both climate change and carbon-related initiatives while combined with nitrogen fixing crops like pulses.”
He pointed out that AGT has shortlines, the Last Mountain Railway and Big Sky Railway, which will feed into the complex from central and west central Saskatchewan. Pointing to AGT’s facilities and FCL’s, he said, “Bringing our infrastructures together provides great leadership and great opportunities for this project.”
“Our goal at AGT Foods, along with Fairfax Financial, our majority owner, is to continue to build a more diversified company with a focus on growing in the plant-based protein application area while demonstrating strong environmental stewardship. This project with FCL is an important step towards meeting those goals. By combining our capabilities in grain logistics and plant protein, with FCL’s strong history and energy and farm inputs and leadership in the business sector in Saskatchewan, we create a powerful local partnership that will work effectively for the communities in which we operate.”
Premier Scott Moe. Screen capture
Premier reacts
Premier Scott Moe said, “Today we have two great Saskatchewan companies that are coming together to build a $2 billion Integrated Agricultural Complex and that should take note, in this nation. That should raise some eyebrows in this nation. It’s one of the largest investments that has ever been made in this province.”
Moe pointed out this is the fifth significant investment in canola crushing made in Saskatchewan over the course of the last year.
“This is most certainly a win for the Saskatchewan economy, a big win for the Saskatchewan economy. It’s a win for workers. It’s a win for families, it’s a win for communities, not just Regina, but many, many communities across the province. And I think, most importantly, and not to in any way be understated, This is a significant win for the environment, in our province, in our nation and around the world,” Moe said.
In pointing out that AGT Foods has been important in the growth of pulse crops in this province, Moe said that in 1990, Saskatchewan had 400,000 acres seeded into pulse crops. Now that number is six million acres per year, a 1,400 per cent increase, resulting “in a significant reduction in emissions.”
In congratulating all involved with the project, Moe said, “The Integrated Agricultural Complex is truly a demonstration of environmental sustainability in action. All of Saskatchewan and all of Canada is going to benefit by this investment in this faith that you are showing in Saskatchewan people today.”
Regina mayor
“This is a very exciting announcement, and I am pleased to see FCL and AGT Foods continuing to invest in our city and our province,” Mayor Sandra Masters said. “This investment will provide Regina and area with new value-added opportunities, assist the city’s long-term sustainability goals, and reinforce Regina’s position a global leader in agriculture.”
“It is historic. FCL has a tendency to lead historic investments in our community.”
Idea origin and energy roadmap
Banda said the deal came about from Al-Katib reaching out to him, and bringing their teams together for almost a year to talk about what is the future for both companies.
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“This is our home. And for us, at Federated, we are in the fuel, the transportation fuel business, and we know it’s going to change and we need to prepare for the future.
“So we’ve been working on an energy roadmap for a number of years now, preparing the various components so that we are more sustainable as an organization. It’s a challenging process. Both teams have their own interests. And we were very, very fortunate that we started from a values alignment; a commitment to grow together. And the teams worked very hard to put together a joint venture which will be 51 per cent owned by Federated 49 by AGT. And we’re looking forward to building that crush plant and then the attendant pieces. Then that fits into our broader strategy of our energy roadmap and the renewable diesel facility and some of the other components.”
Al-Katib concurred on values alignment. “We’ll focus a bit more on the grain origination, you know, the operations of the of the oil crushing facility, and then the logistics transportation and sales of both the meal and then the further value-added processing.”
Seed to tank, farm to fuel
FCL’s distribution and farm inputs business will integrate local community co-ops into gains in digital agriculture, measuring the sustainability and carbon intensity of canola, Al-Katib said. “This is why we keep using the word integrated because this is taking it truly, as Scott said, from seed to tank, and from farm to fuel.”
Banda added, “It is that seed to tank concept that is just critical here.”
He explained that FCL provides seed and crop inputs to local producers, then AGT will step in and bring the canola into an integrated facility which will have two outputs – oil for the renewable diesel facility, and canola meal. That diesel product will then go into FCL’s distribution network.
“We have the best distribution network across western Canada to bring that fuel right back to the farm and to start the cycle all over again. So it truly is a seed to tank story, which is it’s a game changer,” Banda said.
Moe said, “In Saskatchewan, we used to talk about farmgate to plate, now we’re talking yes, about farmgate to plate, but now seed to tank.”
Other feedstocks
Banda said, “One of the reasons we’re not building the crush plant for 100 per capacity of the refinery only 50 per cent of what we’re going to need at the renewable diesel plant is we want to look at other options as well in the longer term. Animal tallows are an example. There could be, in addition, other feedstocks that will help or supplement, and we need to assess all of that going forward.”
This field, north of the refinery, will soon host a renewable diesel facility and a canola crush plant, if current plans go ahead. FCL/Twitter
Reduced refinery usage
Asked about the refinery possibly slowing down, Banda responded, “Federated Co-operatives Ltd., as everyone knows, owns a refinery in Regina. We’re well aware and we are committed to transition into a low-carbon economy. There’s regulatory requirements for that. And it’s the right thing to do, long-term for our economy and for humanity.
“So we have been building an energy roadmap for some time on how do we transition, and how do we work through the various challenges we have with our existing assets? We just recently announced in the fall the purchase of a number of Husky retail assets and that’s designed for the more near term, to utilize the assets in Regina at the refinery, the Co-op Ethanol Complex, and our distribution network to ensure that we can continue to provide the returns to Western Canada, to individuals on the way through.”
Banda continued, “We’ve also made commitments to get to net zero by 2050 and to reduce our greenhouse gas emissions by 40 per cent by 2030. So, there is a transition. And as we build more renewable fuels, assuming the market stays flat, which is a big assumption, for every renewable litre you build, that’s one less (litre of) fossil fuel we have to produce.
“So we do see that decline, and we are seeing that decline at our refinery. We have not been running at full capacity there for some time and we have to transition. There’s a big difference on the ethanol side as that’s more of a blend of ethanol into gasoline, whereas with the renewable diesel plant, it can be a complete replacement for fossil fuel diesel. So that’s significant, and critical in terms of our commitment to reduce our greenhouse gas emissions and transition to a low carbon economy.
“I think the key point here is it will take time and our commitment and partnerships like this here today help us ensure that that is a smooth transition, number one, but as importantly, or more importantly, that we grow; that we grow the demand, we grow the economy and as we produce the renewable diesel. It gives us an opportunity to take that well beyond Saskatchewan in terms of serving the energy needs, the transportation fuel needs, particularly in agricultural and transportation sector.”
Moe added, “There is a cost to emitting carbon, and that is going to increase as we move ahead through the years.
“This announcement, here today, is indicative of this. Canada will not reach net-zero goals that we have put forward as a nation without the full participation and recognition of what is happening here in Saskatchewan.”
That included the reducing emissions and increasing sequestration opportunities, Moe said.
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