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By Josh Skapin
Friday, April 5, 2024, 6 AM MDT
Several factors are leading to both stakeholder and government support for the first proposed at-scale sustainable aviation fuel facility in Canada, says a top executive for the proponent.
Azure Sustainable Fuels Corp. has secured $40 million in funding to date, including support from Natural Resources Canada’s Clean Fuels Fund, Canada Infrastructure Bank and the Government of Manitoba.
The company has the funding to support front end engineering and design (FEED) study for the Manitoba facility and proposed facilities in B.C. and Ontario.
The proposed Manitoba facility would be located near Portage la Prairie.
Azure’s templated design approach will have initial operating capacity of 10,000 bbls/d with the ability to expand to 20,000 bbls/d or approximately one billion litres annually. Facility development is planned in two, 10,000-bbl/d phases.
The first production at the Manitoba facility is targeted for 2027.
According to Azure, its facility would reduce carbon dioxide emissions by 2.6 megatons annually, supporting Canada’s goal of reaching net-zero by 2050.
“We have found nothing but tailwinds,” chief executive officer Douglas Cole told the DOB, referring to support from stakeholders.
“We found nothing but support from people on this,” he added, citing First Nations and other communities near the site. “It has been really rewarding, to be honest.”
On how the project is seen in Manitoba, in particular, he said the facility delivers in a few key ways.
“There’s the environmental benefits, obviously,” he continued. “Being able to provide a cleaner fuel in a state-of-the-art facility. That is viewed as being very positive.
“The economic benefits are viewed being very positive in the communities that we that we’re working in. The opportunity to employ, say, 150 people in a facility like this.”
Those jobs are permanent and high-quality, he added, calling this an important aspect for smaller communities. There would also be nearly 1,500 people employed during construction of the facility.
Cole touched on the facility’s role providing a domestic and stable market for canola products.
“Having the market here in Canada, there’s a clear line of sight, I think, to a more stable market.” Canadian canola producers have been active driving down their emissions, he added.
Cole said Manitoba has been supportive both from a financial perspective and through its regulatory process, calling it well-defined.
In a prepared statement, Wab Kinew, premier of Manitoba said: “Our province is ready to foster exciting, new technologies that leverage Manitoba's thriving agricultural sector and position our province as a hub for cutting-edge development in the sustainable aviation fuel space.”
Manitoba’s quick access to the facility’s canola feedstock was a driver in identifying the province for this project.
“Ideally, you want to be next door — right at feedstock,” Cole said. “When you have that, you have a structural competitiveness, you wouldn’t otherwise have.”
In general, he noted, Canada is “blessed” with canola supply and the ability to grow more.
The Azure CEO is a chemical/petroleum engineer with an MBA from the University of Calgary.
His career has included a variety of roles in upstream oil and gas, gas processing, exploration support, and part of the leadership of three junior oil and gas startups, two of which he co-founded.
He later started True North Renewable Fuels Ltd., which sold its project to Federated Co-operatives Ltd. in 2021.
Discerning capital
Cole, along with Stuart Roberts and Darren Ongyerth — who were executives at True North — “refocused, looked at our learnings from doing that” and established Azure in 2021, Cole said.
Roberts and Ongyerth are vice-president, finance, chief financial officer and director; and vice-president, business development at Azure, respectively. Building this company required a wide breadth of expertise, Cole said, including the ability to raise capital.
He highlighted, for example, the experience Roberts and Ongyerth had working for Desjardins.
“There was a time in this city when you could get a good exploration well that had a one-in-ten chance of success, [and] you could raise capital to go do that,” he added. “It is a different time now and capital is much more discerning where it goes.”
There was an opportunity with SAF.
“Within transportation, aviation is … going to be the most challenging segment of transportation to decarbonize,” Cole said.
He pointed to the EV movement with passenger vehicles and acknowledged decarbonization of heavy haul and North American rail will not be easy. However, “aviation — that is a whole different level of complexity.
“To bring in new aviation, new aircraft, that’s a 10 to 20 year horizon. To bring in new fueling systems, longer than that.”
He continued: “The airline industry has a challenge to decarbonize. Everybody in that industry recognizes sustainable aviation fuel is going to be the major component of decarbonizing aviation, so that is where we looked.”
Growth platform
In addition to the aforementioned Canadian facilities, the company also has a proposed project in the U.S. state of Kansas. All FEED work on these projects is expected to be complete by the end of 2024.
“With four projects going on, we have the ability to become a platform for growth,” Cole said.
“Capital likes to be able to take success and repeat that investment.
“Having the ability to replicate this — so design one, build many, comes into play.”
He added that Canada is a jurisdiction that does a lot of consultation and puts focus on getting things right when approving projects.
This takes time.
“I expect, between our opportunities that we’re pursuing in British Columbia, Manitoba, Ontario and Kansas, we’ll see staggered timelines for approvals for those. Which is fine, because we’ll see staggering timelines for developing this, as well.”
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