By Nia Williams and Sourasis Bose
(Reuters) -Imperial Oil on Thursday said it will invest C$720 million ($538.64 million) to construct Canada’s largest renewable diesel facility at its Strathcona refinery near Edmonton, Alberta.
The Calgary-based company said the facility will produce 20,000 barrels per day of renewable diesel and is expected to start production in 2025.
Imperial expects regulatory approval for the project, first announced in August 2021, in the near-term.
The facility will use low-carbon hydrogen and biofeedstock combined with a proprietary catalyst to produce the renewable diesel, which Imperial says will reduce greenhouse gas emissions by roughly 3 million a year compared with conventional fuels.
The low-carbon hydrogen will be produced with carbon capture and storage technology and supplied by Air Products.
Imperial is developing agreements with third parties for biofeedstock supply. Jon Wetmore, Imperial’s vice-president for downstream, said the project had moved forward quickly to help secure feedstocks such as canola, which needs to be run through crush plants and turned into canola oil before being used.
“Early mover advantage does help, we’re aware at some point there might not be enough crush capacity for all the renewable diesel projects being contemplated in Canada,” Wetmore told Reuters in an interview.
The project will be partly funded by credits granted under British Columbia’s Low Carbon Fuel Standard, and a “significant portion” of the diesel produced will be supplied to B.C. to help the province meet its emissions targets.
Site preparation and initial construction are underway and the project is expected to create about 600 direct construction jobs.
Imperial’s shares were last up 1.3% at C$71.05 on the Toronto Stock Exchange.
“We view this as a neutral impact for now given the capital outlay and the long-term adoption, appreciating that Imperial continues to make strategic investments to reduce emissions from its own operations,” National Bank analyst Travis Wood said in a note to clients.
($1 = 1.3367 Canadian dollars)
(Editing by Sherry Jacob-Phillips and Diane Craft)