Imperial plans to build Canada's largest renewable diesel facility
Geoffrey Morgan
© Provided by Financial Post
Imperial Oil Ltd. expects the project to be operating in 2024.
CALGARY – Imperial Oil Ltd. plans to build a new renewable diesel unit at its refinery near Edmonton, joining the ranks of oil refiners across Canada using vegetables and seeds to lower the emissions of the fuels they sell.
“Imperial is excited to announce our plan to build the largest renewable diesel manufacturing facility in Canada,” Brad Corson, Imperial’s chief executive, said in a release Tuesday that announced the plans to build a 20,000-barrels-per-day renewable diesel project at its 200,000-bpd Strathcona Refinery.
Renewable diesel is produced from vegetable crops. Imperial plans to use canola, soy or sunflower oils in combination with hydrogen, produced from natural gas with carbon-sequestration facilities, to make its renewable diesel at Western Canada’s largest refinery.
Imperial expects the project will reduce emissions by three million tonnes, which is the equivalent of taking 650,000 cars off the road. The Calgary-based oil major, which owns refineries in Alberta and Ontario, expects the project to be operating in 2024, which is ahead of a 2030 deadline to meet more stringent carbon-intensity targets for fuels in this country.
The 2030 deadline is part of the new rules set out in a draft of Canada’s Clean Fuel Standard, which Ottawa planned to implement by the end of 2021. The current federal election could delay its implementation, but multiple refineries in Canada are beginning to use renewable diesel in an effort to get ahead of the regulations.
“Were it not for that policy, we probably wouldn’t find value in this. It’s an important driver for the project,” said Jon Wetmore, vice-president of downstream at Imperial Oil. “People need to be looking at ways to move the carbon intensity down in the diesel and gasoline that they sell.”
He said Imperial is choosing renewable diesel, which uses vegetable crops, rather than biodiesel, which uses waste vegetable and cooking oils, because the former functions better in Canada’s cold climate.
Imperial isn’t disclosing an official project cost estimate yet, but Wetmore said the price tag will be in the “hundreds of millions of dollars” and will spur a similar level of investment in a carbon-neutral hydrogen facility and seed-processing facility.
Refiners across Canada have made a string of similar announcements in the past month or so.
Calgary-based Tidewater Midstream and Infrastructure Ltd. spun out a renewable fuels business unit in a $150-million initial public offering on Aug. 18 to fund a 300-bpd renewable diesel facility at its Prince George, B.C., refinery.
In July, Dallas-based private-equity firm Cresta Fund Management bought a controlling stake in the 135,000-bpd Come by Chance refinery in Newfoundland and Labrador, with the goal of converting the facility to produce renewable fuels.
“We do think that clean technology is going to get much more important to the sector, not only because of the clean fuel standard, but really, globally, that’s the way governments are moving,” said Susan Bell, director of Americas refining and marketing at IHS Markit.
“Even without a clean fuel standard, if the federal government maintains its commitment to net zero by 2050, then we have to do something to our transportation fuel supply.”
CALGARY – Imperial Oil Ltd. plans to build a new renewable diesel unit at its refinery near Edmonton, joining the ranks of oil refiners across Canada using vegetables and seeds to lower the emissions of the fuels they sell.
“Imperial is excited to announce our plan to build the largest renewable diesel manufacturing facility in Canada,” Brad Corson, Imperial’s chief executive, said in a release Tuesday that announced the plans to build a 20,000-barrels-per-day renewable diesel project at its 200,000-bpd Strathcona Refinery.
Renewable diesel is produced from vegetable crops. Imperial plans to use canola, soy or sunflower oils in combination with hydrogen, produced from natural gas with carbon-sequestration facilities, to make its renewable diesel at Western Canada’s largest refinery.
Imperial expects the project will reduce emissions by three million tonnes, which is the equivalent of taking 650,000 cars off the road. The Calgary-based oil major, which owns refineries in Alberta and Ontario, expects the project to be operating in 2024, which is ahead of a 2030 deadline to meet more stringent carbon-intensity targets for fuels in this country.
The 2030 deadline is part of the new rules set out in a draft of Canada’s Clean Fuel Standard, which Ottawa planned to implement by the end of 2021. The current federal election could delay its implementation, but multiple refineries in Canada are beginning to use renewable diesel in an effort to get ahead of the regulations.
“Were it not for that policy, we probably wouldn’t find value in this. It’s an important driver for the project,” said Jon Wetmore, vice-president of downstream at Imperial Oil. “People need to be looking at ways to move the carbon intensity down in the diesel and gasoline that they sell.”
He said Imperial is choosing renewable diesel, which uses vegetable crops, rather than biodiesel, which uses waste vegetable and cooking oils, because the former functions better in Canada’s cold climate.
Imperial isn’t disclosing an official project cost estimate yet, but Wetmore said the price tag will be in the “hundreds of millions of dollars” and will spur a similar level of investment in a carbon-neutral hydrogen facility and seed-processing facility.
Refiners across Canada have made a string of similar announcements in the past month or so.
Calgary-based Tidewater Midstream and Infrastructure Ltd. spun out a renewable fuels business unit in a $150-million initial public offering on Aug. 18 to fund a 300-bpd renewable diesel facility at its Prince George, B.C., refinery.
In July, Dallas-based private-equity firm Cresta Fund Management bought a controlling stake in the 135,000-bpd Come by Chance refinery in Newfoundland and Labrador, with the goal of converting the facility to produce renewable fuels.
“We do think that clean technology is going to get much more important to the sector, not only because of the clean fuel standard, but really, globally, that’s the way governments are moving,” said Susan Bell, director of Americas refining and marketing at IHS Markit.
“Even without a clean fuel standard, if the federal government maintains its commitment to net zero by 2050, then we have to do something to our transportation fuel supply.”
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Parkland Fuel Corp. is currently “co-processing” or blending renewable fuel directly into its diesel production at its Burnaby, B.C., refinery. By year-end, the Calgary-based company expects to blend or co-process more than 100 million litres of “bio-feedstock” in its refinery, which the company said will be equivalent to taking 80,000 cars off the road.
“We expect to see further announcements of this variety as Canada’s oil and gas sector continues to adapt and in our view, lead the ongoing energy transition in North America,” National Bank analyst Travis Wood said in a research note Tuesday, adding he expects to see additional cleantech investments in carbon capture, hydrogen and biofuels.
Imperial’s Wetmore said the company is also considering co-processing renewable fuels at its Strathcona Refinery and using renewable diesel at its two refineries in southern Ontario.
Right now, however, the biggest market for renewable fuels is in B.C. and a major source of crop-based feedstocks is on the Prairies, making the Edmonton region a more suitable location for Imperial’s project.
“The crop sources that we’re looking at are all within one day’s rail supply,” Wetmore said. “We picked this location as well because British Columbia is right next door and it’s a really important market for us.”
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