Husky fuels up new ethanol plant in Western Canada

WINNIPEG, Manitoba – Husky Energy said Monday it plans to spend C$90 million to C$95 million ($69 million to $73 million) to build Western Canada’s biggest ethanol plant, next to its heavy oil upgrader in Lloydminster, Saskatchewan.

The plant is one of seven grain-based fuel projects in the works that will boost Canada’s total ethanol production fourfold, thanks to an injection of C$78 million in federal subsidies.

The Husky operation is scheduled to be up and running by the end of 2005 and will produce 130 million litres (34 million U.S. gallons) of ethanol a year, Canada’s fifth-largest oil producer and refiner said in a news release.

The company will receive C$7.8 million for the project from the federal government for the Lloydminster plant, along with C$6.4 million to expand an existing ethanol plant in Minnedosa, Manitoba, to 80 million litres from its existing 10 million litres, according to a federal government release.

Ethanol, a fuel additive made from corn, wheat or other plant sources, emits less greenhouse gases than fossil fuels.

Ottawa has said it wants a third of Canadian gasoline to contain at least 10 percent ethanol by 2010, which would require 1.4 billion litres of ethanol a year.

Current production is about 200 million litres, while 7 percent of gasoline sold in Canada is currently blended with ethanol.

Two privately held projects will convert distilleries in Weyburn, Saskatchewan, and Kelowna, British Columbia, to ethanol plants.

The federal government has promised another C$22 million to ethanol plants in a second round of subsidies.