Rentech plans to build $500M biomass plant in Ontario

Rentech plans to build $500M biomass plant in Ontario

Alternative energy developer Rentech Inc. plans to build a biomass plant to produce jet fuel in White River, Ont., which could create 400 long-term jobs in the province.

Ontario’s Ministry of Northern Development, Mines and Forestry has awarded Rentech the use of a forestry lot about 300 kilometres north of Sault Ste. Marie.

The company plans to convert about 1.1 million cubic metres per year of Crown timber into 85 million litres annually of low-carbon jet fuel.

“This will be the largest renewable clean jet fuel program in the world,” Rentech’s chief executive officer D. Hunt Ramsbottom said in an interview.

“This will be the first of its kind where the province, the federal government, local communities and a private company come together and this will be the first plant of its kind in the world.”

The investment, in partnership with the Pic River First Nations community and potentially the federal government, is expected to total $500 million, the California-based company announced Friday in Sault Ste. Marie.

The region has suffered significant job losses in recent years as the forestry sector has struggled to cope with falling demand for pulp and paper products. The lumber sector has also been squeezed by the downturn in the American housing market.

Rentech chose White River as the site for its new project because it has infrastructure from an existing mill, as well as access to water, power and rail.

It would use a combination of stumps and treetops on the ground as well as cutting down new timber to make the fuel. The award is the first step in the process of making the wood supply available to the project, the company said.

“We’ve got airline partners both in North America and globally clamouring for these fuels, so as soon as we’re up and operating we won’t have any problem getting planes up in the air on this,” Ramsbottom said.

The product would cost about the same as conventional fuel, but would burn more cleanly with lower emissions. It is already certified for use in commercial airplanes, he added.

The proposed plant would also produce 43 million litres annually of renewable naphtha, a chemical feedstock.

Construction on the project, called the Olympiad Renewable Energy Centre, is scheduled to begin in 2013 and will employ about 1,000 people in the initial stages.

The renewable energy plant will be ready for commercial production in 2015, Rentech said. The company believes the plant would have an estimated 83 full-time employees, but would also support more than 300 indirect positions in the local forestry industry.

Ramsbottom said the Pic River First Nation could own up to an 18 per cent equity interest in the project in exchange for cash from a government program.

Rentech is awaiting approval of an application to Sustainable Development Technology Canada, whose $500 million NextGen Biofuels Fund can set aside a maximum $200 million in federal government funding. The company is expected to repay those costs from a percentage of its cash flows once the project is running.

The company said it has been in talks with the federal government for a year and is encouraged that its recently submitted application will be approved.

Ramsbottom said the company will fill in funding gaps from what it doesn’t receive from the federal government and the local First Nations community.

While the federal funding is an important part of the project, the company said if it is not granted, it has “creative ways” to make up that financing and would consider a number of funding alternatives.

Vicky Sharpe, president and chief executive of Sustainable Development Technology Canada, said Rentech’s project proposal is an example of how the NextGen fund can provide support to advancing new biofuel technologies.

“We look forward to working closely with Rentech as its application advances to the next stage of consideration,” she said.

Michael Gravelle, the Ontario Minister of Northern Development, Mines and Forestry, said the province has become a prime location for many companies that are expanding globally.

“Today’s global business model drives companies to locate their businesses where they find the best combination of talent, cost efficiencies and capacity for efficient manufacturing infrastructure,” he said in a statement.

“We are delighted to welcome Rentech’s expansion to Northern Ontario and commend the spirit of partnership and inclusiveness through which they have already built foundations for strong relationships with northerners and First Nations peoples.”

“Communities such as Pic River and White River that have withstood the industry shift from traditional pulp, paper and sawmills to new uses for Ontario’s forests now have a renewed sense of hope,” Chief Roy Michano said in a statement.

“We are pleased with our partnership with Rentech, a very forward thinking company that has embraced First Nations as an integral part of such an ambitious project.”

Rentech operates a demonstration plant in Commerce City, Colo., where it has produced more than 150,000 litres of certified synthetic fuels. In 2010, a commercial flight flew on a blend of Rentech’s synthetic jet fuel and conventional fuel.

It has initial agreements to fuel 13 airlines in California and another with British Airways.

The Canadian Press