The Whole Lot

From wasted wheat straw to industrial hemp and canola-based biofuels, Saskatchewan is building upon its strengths while becoming more sustainable.

It’s mind-boggling to consider that Saskatchewan farmers seeded over seven million hectares of cereal grain in 2020.¹ But when more than 23 million metric tonnes of grain is harvested from these fields, an inconceivable amount of waste biomass is created as the stalk of the plant is left behind.

Drawing straws

By mid-2024 a new facility in Regina will convert the wheat straw with no former end-use that surrounds the city into a sustainable pulp product as the Kelowna-based Red Leaf Pulp Ltd. (Red Leaf) becomes the first company to develop and operate a non-wood fibre pulp plant in Canada.

While the United States produces nearly twice the amount of grain straw, Martin Pudlas, CEO of Red Leaf, says Canada’s high concentration of cereal grains is advantageous because it creates an opportunity to aggregate large volumes of straw which balances the economies of scale needed to produce alternative plant fibre.

“The global demand for pulp continues to increase and we need to find new sources of fibre,” Pudlas says. “When we look at the Canadian Prairies and see wheat straw fibre that’s available from an existing industry, that in many cases really has minimal use, we think there’s tremendous potential to generate significant value in putting this into low-carbon biomaterials as well as low carbon intensity fuels.”

According to Pudlas, Red Leaf will need less than 15 per cent of the available residual wheat straw within a 120-kilometre radius of Regina for the facility’s expected capacity to produce 600 tonnes per day of market pulp—making it scalable and easily expandable into future locations.

And their innovations are being supported as the Government of Canada recently invested $3.8 million through Sustainable Development Technology Canada into Red Leaf to help the company improve and commercialize its proprietary process for converting agricultural residues into pulp. Not only is Red Leaf “increasing grower revenue,” but Pudlas says their process uses half the energy and less water to separate fibres than a conventional wood pulp mill, while creating a 50 per cent reduction in fossil fuels per acre when farmers don’t need to harrow or thresh excess straw, and Saskatchewan’s availability of feedstock presents a “tremendous opportunity” in comparison to traditional forestry.

“When you look at forests they’re in a 70-90 year cycle here in Canada and think of the amount of effort, the roads that need to be built, and reforestation, all of those associated costs and complexities,” Pudlas says. “We’re working in concert with the growers, and we’re not changing what they’re doing. That land is still going to be used to create products supporting the food chain. We’re just going to use that residual and create enhanced value.”

Using it all

Also enhancing value and reducing waste through its proprietary processes is Blue Sky Hemp Ventures (Blue Sky). Generally, most crops have one main value driver, but industrial hemp is unique in the fact that it has three value chains—superfoods from grain, CBD from flower and leaves, and industrial products from stalks. This unique crop requires a unique approach to see it become a mainstream crop in Canada, and Blue Sky believes it has the answer through its “whole plant utilization approach.”

Whereas its competitors focus on harvesting one part of the plant, Blue Sky has spent the past three years and $20 million developing a system of processes that allow the company to cost-effectively process all parts of the hemp plant which reduces the cost of production to make hemp more competitive. Moreover, this approach also results in 3.3-6.6 tonnes per acre of Co2 being commercially sequestered.

“One of the first things we recognized about industrial hemp was that a different business model was required to unlock the full potential for farmers, processors, and the environment,” says Andrew Potter, president, CEO, and co-founder of Blue Sky. “Whole plant utilization just makes so much sense for everyone. Small communities win because this approach requires local processing facilities. Farmers win because this is a high-value crop that improves soil quality. The plant wins because this is commercially viable and scalable Co2 sequestration.”

Potter says this solution is more economical for their farming partners whom Blue Sky currently contracts 8,000 acres of farmland from because they don’t have to remove that biomass but it’s also environmentally sustainable because hemp is distinguished by the amount of CO2 it sequesters.

In addition to Blue Sky using its proprietary ag technology FieldAlytics to maximize yields, the company has constructed two scalable facilities in Saskatchewan. Biomass collection happens in Rosetown where Blue Sky’s “reduced flower and leaf” proprietary processing system reduces the volume of material by up to 50 to 90 per cent, removes any remaining seed and fibre, and increases CBD potency by up to three times while lowering transportation costs.

This uniform, extraction-ready product that’s free of contaminants can then be easily shipped to Blue Sky’s state-of-the-art central processing and CBD extraction facility in Saskatoon which the company received its Health Canada Standard Processing License for in 2020. Additionally, hemp grain is processed there as well.

“The downside,” says Potter, “there’s no playbook for how you build a whole plant utilization system.” But with over twenty years of experience in the energy industry he is focused on how further commoditization can benefit the cannabis world.

“Our answer was and always has been … we need to build a company from day one that is built around a low-cost philosophy and that has some competitive advantage in a commoditized future,” Potter says. “We strongly believe that the time for hemp is finally here and look to cement our position as leaders in whole plant utilization.”

Yellow oil fields

While innovations like Red Leaf and Blue Sky are improving Saskatchewan’s agriculture, others seek to fully utilize another plant the province already excels at growing, canola, of which it produces approximately 11 million metric tonnes annually.² The provincial government’s Saskatchewan Growth Plan has a target to crush 75 per cent of the canola Saskatchewan produces in the province by 2030, but it expects to be far ahead of this goal in just a few years following announcements from four major companies that they will be substantially increasing their crushing capacities.

One of those was Viterra, which announced its intent to design and construct a facility with 2.5 million metric tonnes of capacity in Regina last April, which would make it the world’s largest integrated canola crushing facility. The company expects the facility to be operational in late 2024.

Kyle Jeworski, president and CEO of Viterra, thinks it’s noteworthy to discuss both the success of canola as Saskatchewan’s leading oilseed where production has doubled in the last two decades, as well as the growing global demand for this plant as a source of food, fuel, and fibre.

“The facility that we’re designing is fully capable of serving all markets and we’ll have full refining capabilities within the facility,” Jeworski says.

“So that will allow us to serve food customers, but with things that are happening around the federal government’s Clean Fuel Standard act … the expectation is that we will see a substantial increase in the demand for canola as the vegetable oil of choice to go into renewable diesel production,” Jeworski says.

Jeworski highlights that the facility’s processing capacity is greater than Canada’s entire canola seed export market to Japan and Mexico, its second and largest largest export destinations, and will “be on par with the largest export market for canola seed out of Canada, which is China.”

He says Viterra also intends to implement a triple loop rail configuration which is another first for crush plants globally, and is using the latest technology to focus on the sustainability of the facility in terms of its water and energy use. Jeworski is co-chair of the steering committee for Economic Development Regina’s Agriculture and Food Innovation Strategy that has a vision for the city to become a global ag and food hub.

Having been raised in Regina and with a family farm in Saskatchewan, he believes Viterra’s and these other investments represent an “unprecedented time” for the province. “What’s very exciting is that we’re building on our
current strengths … and we see an abundance of growth opportunities here, when you have investments such as ours, you’re going to see, and we are seeing interest from so many other parties looking at other opportunities to better use canola oil,” Jeworski says.

Fueling up

One of the investments representing this opportunity is Federated Co-operatives Limited’s (FCL) offer to purchase land north of the Co-op Refinery Complex (CRC) to construct a renewable diesel plant that was approved by Regina City Council last November.

While construction is still subject to market conditions and securing government approval and support, the renewable diesel plant is planned to be operational by 2027, estimated to create approximately $1.85 billion in economic activity, employ up to 150 people, and primarily utilize locally grown canola as its main production feedstock.

This news was followed by the Jan. 17, 2022 announcement that FCL had signed a memorandum of understanding to form a joint venture (JV) partnership with AGT Food and Ingredients Inc. (AGT Foods). The JV will look to construct a $360 million canola crush facility to supply approximately 50 per cent of the feedstock required for the 15,000-barrel-per-day renewable diesel plant, with the remainder of the supply contracted from other crushing facilities.

According to Patrick Bergermann, associate vice president of FCL’s Energy Roadmap, the renewable diesel plant, FCL’s $500 million investment into carbon capture at the CRC, and the purchase of the Co-op Ethanol Complex in Belle Plaine are “three of the key elements that we’ve articulated thus far” for the company to reach its commitment of reducing greenhouse gas emissions by 40 per cent below 2015 levels by 2030 and its aspiration to achieve net-zero by 2050.

“When we look at the industry opportunities in Western Canada, we really do see renewable diesel as an important play for the western economy because of the fact that the feedstocks that are utilized in renewable diesel production are already produced here,” Bergermann says. “So it’ll be really exciting for the Western Canadian economy to find new ways to add value to some of those products that already exist here.”

He says FCL believes in addition to the jobs they are creating, economic development at home trickles down to the farmers growing the crops because they will have access to new options since the industry is “fairly reliant upon the export of raw canola seed to foreign markets.”

Furthermore, the renewable diesel FCL will produce differs from biodiesel because “you can actually substitute out 100 per cent renewable diesel for petroleum-based diesel products,” which Bergermann thinks is exciting for Canada and any country wanting to transition to zero-emission diesel vehicles such as farm machinery, long haul and municipal transport, and other industrial equipment.

Prior to the end of November, FCL made another major announcement that it had agreed to invest $264 million to purchase 181 Husky retail fuel sites from Cenovus Energy Inc., which represents the largest retail acquisition in Co-op’s history. Bergermann believes these fuel sites will primarily function as distribution points saying, “but of course, every distribution point also acts as an opportunity to explain our story to end-use customers.”

“The more that we can utilize that output right here at home, add value to it right here at home, that just means more jobs and more economic opportunities right here in the West.”

References

¹Andreas, Ashli. “Agriculture Sector Overview.” Government of Saskatchewan. https://www.saskatchewan.ca/business/agriculture-natural-resources-and-industry/agribusiness-farmers-and-ranchers/saskatchewan-import-and-export-information/resources-for-importers/agriculture-sector-overview
² Shanks, Jamie. “Crushing It: Saskatchewan’s Canola Processing Capacity is Taking Off.” Agriview, Fall 2021. www.saskatchewan.ca/business/agriculture-natural-resources-andindustry/agribusiness-farmers-and-ranchers/sask-ag-now/agriview/agriview-fall-2021/canola-processing-capacity