File Photo
Logistics, proximity to feedstock, labour and a business-friendly city environment led Covenant Energy to choose the Border City to build a $900 million renewable diesel refinery in Lloydminster.
Covenant aims to produce biodiesel and jet fuel by converting processed canola oil and other sustainable feedstock with a capacity of 9,000 barrels a day.
Lloydminster got the nod over the Estevan, Saskatchewan area in the selection process with Lloyd ticking off those boxes, according to Covenant president CEO, Josh Gustafson.
“We’re really excited and there’s lots of benefits and the city’s been amazing to work with,” he said.
Lloydminster Mayor Gerald Aalbers says the refinery in Lloydminster signifies the power of collaboration between the Government of Saskatchewan, the City of Lloydminster, and Covenant Energy.
“This milestone ushers in a new era of sustainable growth and solidifies Lloydminster as a prime business destination, creating jobs and fostering economic prosperity,” said Aalbers.
Covenant has purchased 134 acres east of the Lloydminster Golf and Curling Centre for the refinery with construction slated to begin by mid-2024 and completed in 2026.
The project will create hundreds of local jobs during construction and 60 full-time jobs through the two-year build-out.
Gustafson met last Monday with the Lloydminster Technical Oilfield Society (OTS), which released a news release in support of the project.
He says the OTS helped to reassure their awareness of the high degree of technical expertise available in the area to get the project up and running.
“Relying on Lloydminster’s wide variety of experts is going to be beneficial for us,” said Gustafson.
He also says having access to both CP and CN rail in the Lloydminster area was a big factor when comparing Lloyd to other locations for the refinery.
Gustafson noted the proximity to feedstock was another big reason for choosing Lloyd.
“Lloydminster being in the midst of a lot of the crushers in Northern Saskatchewan and Alberta was a big piece that played a role in us looking at moving up to Lloyd,” he said. “We’ve been talking to all the crush facilities within a 400-kilometre radius, but obviously with ADM right in Lloydminster, we’d like to work with the closest crushers we can,” said Gustafson.
The Saskatchewan-based startup aims to use crude super-gummed oil, which is a less refined canola oil, as feedstock.
“We will be able to use a lot of that off-spec oil that typically doesn’t meet the mark for the edible market,” Gustafson explained.
Gustafson is a farmer who grows canola and other crops on his 14,000-acre farm between Estevan and Weyburn along with a cattle operation.
He started Covenant and the project in 2019 working remotely and has four other partners.
They are currently working with a variety of consultants, advisors and engineering firms on the project.
“We’re really excited about it. This is not just going to be a flagship project for Saskatchewan, but Canada in general. We’ll be one of the only renewable diesel facilities in the entire country,” said Gustafson.
He says the fuel can be blended in with any fossil fuel product and it doesn’t need any kind of special treatment.
“It’s a true ‘drop in’ product,” he explained.
Specifically, the refinery will produce hydrogen-derived renewable diesel using state-of-the-art technology that burns more completely than fossil diesel, while reducing up to 80 per cent of emissions.
Gustafson says Covenant will also produce Arctic-grade renewable diesel, which is something he says is a bit unheard of in Canada yet.
“Our Arctic product will be able to be used down to -40 C and we will be able to produce sustainable aviation fuel.”
