Clearly Canadian

Husky Energy Ltd.'s roots are in Cody, Wyo., yet there is something distinctly Canadian about it––maybe because it was started by a Canadian. In 1938, rancher Glenn Neilson from Cardston, Alberta, convinced a farm supply cooperative and a Montana contractor to join him in purchasing two heavy oil refineries. That was only the beginning of a series of business moves that eventually made Husky one of Canada's largest energy companies.
By Khalila Sawyer | November 13, 2007
Now headquartered in Calgary, Alberta, Husky Energy Ltd. is a major commodity marketer and has become an integrated energy company with interests not only in oil and natural gas, but also in renewable fuels such as ethanol. With its trademarked ethanol-blended gasoline "Mother Nature's Fuel," the company plans to become Western Canada's largest ethanol producer.

In 1981, Husky constructed its first plant in Minnedosa, Manitoba, producing ethanol for fuel and industrial use. Since then, both the Saskatchewan and Manitoba governments have mandated the use of ethanol-blended gas in the provinces. Anticipating the mandates, Husky decided to build two more ethanol plants. During 2006, the company completed its second ethanol plant in Lloydminster, Saskatchewan, which produces 130 MMly (34 MMgy) of ethanol, and is constructing an additional plant at its Minnedosa site scheduled for completion this year.

Today, Husky produces more than 300,000 barrels of oil equivalent per day, employs more than 4,000 people and has been reborn into one of Canada's largest energy companies. With its main energy assets in Alberta and Saskatchewan, its petroleum products are available at more than 515 gas stations across Canada.

Husky's Ethanol Expansion
Lloydminster, a city of unusual geographical distinction, straddles the borders of Saskatchewan and Alberta and is home to Husky's second major ethanol facility in Western Canada. The plant site is adjacent to Husky's heavy oil upgrader, where operational infrastructure already exists. After becoming fully operational in the fall of 2006, the facility became the largest ethanol plant in Western Canada, employing 26 full-time personnel.

With a main road extended around the plant site and a rail spur installed, Husky anticipates attaining 350,000 metric tons (386,000 tons) of truck-delivered wheat annually from local growers, which represents 14 percent of the existing volume produced within a 161 kilometer (100 mile) radius of Lloydminster. In turn, the plant expects to produce approximately 130,000 metric tons (143,000 tons) of distillers dried grains with solubles (DDGS) per year. The company will market its own ethanol through its network of Husky Energy and Mohawk Oil retail outlets spanning from Vancouver Island to eastern Ontario.

Approximately 210 kilometers (130 miles) northwest of the Manitoba's capital city of Winnipeg, is the town of Minnedosa, home to Husky's new ethanol facility. The company has plans to expand its existing 25-year-old 10 MMly (2.6 MMgy) plant to include a second fully operational facility at this site. The expansion was determined based on its existing on-site operations and access to major highways and railways. The second Minnedosa plant is slated for completion in 2007 and will produce 130 MMly (34 MMgy) of ethanol.

The new facility will create a major boom for the whole area. The project has brought in construction workers from all over Western Canada and will give local producers a new market in which to sell their crops. "We've had some positive feedback from the farm community," says Graham White, Husky's senior communications advisor. "Husky has become a great alternative in terms of selling wheat—we've become another customer for the farmers and they no longer have to go through the [Canadian Wheat Board] to sell." The project was expected to be completed in the third quarter of this year and be fully operational by the fourth quarter. Once the plant is up and running, it will take in the prolific wheat crop that is produced in the area and will generate a greater supply of coproducts.

While oilseeds and cereal grains are the main crops grown in the province, the facilities are specifically designed to process feed-grade wheat varieties purchased from local grain growers. Wheat varieties include Canadian western soft, Canadian prairie spring red, Canadian prairie spring white and red winter. These feed-grade wheat selections contain more ethanol producing starch than higher quality milling wheat. Other grains such as durum, barley, corn or rye can also be used on rare occasions.

Despite a difficult winter for wheat, production levels at Husky shouldn't be affected. "We are not as picky in the type of wheat we can take," White says. "We are fairly flexible and are able to take any kind of wheat as long as it has low levels of moisture." Husky's major quality requirements for feedstocks are, but are not limited to less than 15 percent moisture content, and fusarium at a maximum of 1 part per million of vomitoxin. Husky is also able to purchase wheat that's been downgraded as a result of weathering or sprouting, as long as its weight remains at, or above 58 pounds per bushel.

When completed, the Lloydminster and Minnedosa sites will each consume 350,000 metric tons (386,000 tons) per year of feed wheat making Husky one of Western Canada's largest buyer of wheat. The company will purchase an estimated 700,000 metric tons (772,000 tons) of Canadian wheat per year.

Future Production
After its completion, Husky hopes that the two plants will demonstrate the company's commitment to helping reduce motor vehicle emissions. Environmental protection and energy efficiency are important elements to Husky's ethanol facilities.

The Lloydminster plant is built adjacent to the company's existing upgrader and the Meridian Cogeneration facilities. The plant's close proximity to the other two facilities allows for recycled waste, heat and steam to be used, significantly reducing the amount of natural gas required for plant operation. Husky's new ethanol plants also use efficient modern technology to apply the principles of reduce, reuse and recycle by using existing industrial land for its plant sites, reusing process water (reducing the need for raw water), recycling waste water, and using newer more efficient technologies and dust control systems to minimize emissions. In addition, no significant solid wastes are produced from the facilities.

Over the next several years, Husky expects the market for ethanol-blended fuels in Canada to grow significantly. With the construction of two new large-scale ethanol plants, Husky is in an excellent position to supply markets in Saskatchewan and Manitoba. The company also expects its new facilities to produce a surplus of ethanol to distribute to Husky and Mohawk retail outlets in other provinces. "Right now our main goal is to complete the Minnedosa plant and bring it to its full capacity in 2008," White says. "Husky has not made that many long-term goals yet; we just hope to continue to market and successfully sell our products."

Khalila Sawyer is the managing editor of Biofuels Canada. Reach her at ksawyer@bbibiofuels.com or (519) 576-4500. This feature was reprinted from the August/September 2007 issue.