Canadian startup proposes renewable diesel project in Saskatchewan

Canadian startup Covenant Energy Ltd. is proposing to build a standalone renewable diesel and sustainable aviation fuel (SAF) plant in southern Saskatchewan. Scaled at between 79 and 86 MMgy, the facility would use up to 350,000 metric tons of canola oil per year, creating demand for 35 million bushels of canola seed. The project would use recycled hydrogen in the fuel-manufacturing process.

The company, which formed in 2019, says it has completed initial pre-FEED engineering and feedstock studies, in addition to a marketing, demand and pricing study. Covenant Energy says the project would create a welcomed opportunity for a new, 1 million-ton canola crush facility to co-locate with its proposed renewable diesel project, which would provide a built-in demand for 80 percent of the plant’s oil output.

“While the ambition is to use predominantly Canadian canola oil as the feedstock and ship renewable fuels throughout Canada and Canada’s northern communities, Covenant’s proposed location will be situated on a Class 1 railway, giving the ultimate flexibility to access feedstock from across Canada and the U.S., as well as providing the potential to sell product into the U.S. market,” the company stated.

Once financing is secured and regulatory permits approved, Covenant Energy hopes to start production by the end of 2023.

“Covenant Energy is eager to be a part of attaining Canada’s environmental sustainability and net-zero commitments in a way that will stimulate the Saskatchewan economy,” said Josh Gustafson, president and CEO. “Personally, being deeply rooted in the ag industry as a member of a fifth-generation Saskatchewan farming family with over 13,000 acres of production, I see the positive future impact and I am excited about bringing value-added opportunities. We are also excited to explore partnership with the oil and gas industry through fuel blending to bring longevity and diversity to a region that traditionally produces other fossil fuels.”

Canada’s federal Clean Fuel Regulations would be the main demand driver for the project, Covenant noted. The draft regulations were published in December.