British-Based AEG is targeting Newfoundland for its first Canadian investment in its biofuel technology

New biofuel investment for Newfoundland

British-Based AEG is targeting Newfoundland for its first Canadian investment in its biofuel technology—and it is looking to re-start a business plan involving forestlands in Alberta.

By Tony Kryzanowski

British-based Active Energy Group (AEG) has secured an agreement in principle for the right to harvest some 140,000 cubic metres of wood each year for 20 years from the Northern Peninsula of Newfoundland, as part of plans to build a biofuel facility in the province.

AEG is planning to build a biofuel production facility in the region through a subsidiary, Advanced Biomass Solutions, applying the company’s CoalSwitch technology that involves using wood fibre.

Company CEO Richard Spinks told Logging and Sawmilling Journal (LSJ) that the company has earmarked $47 million (U.S.) for capital spending on the Newfoundland project this year. They are hoping to locate their biofuel production plant at an idled sawmill and pellet plant located in Roddickton. The plan is to produce 40,000 tonnes per year, using wood fibre from their forest holdings, as well as wood waste from other suppliers, but the company is waiting for government approval to initiate Phase 1 of their investment plan.

The company anticipates that five to seven ships will transport their biofuel through the nearby port of St. Anthony to markets in Europe, where Spinks says that they have already secured buyers. They are also hoping to develop a local market for their biofuel to use as a heating fuel alternative to propane and natural gas.

The biofuel production plant is expected to employ about 56 people in Roddickton and another 14 in St. Anthony. More people will be employed within their forest harvesting operations.

British-Based AEG is targeting Newfoundland for its first Canadian investment in its biofuel technologyAEG recently opened a CoalSwitch biofuel production facility in Utah. It claims— with the backing of research investigating the CoalSwitch production process and final product at the University of Utah—that the main benefit of its biofuel is that it can be substituted for coal without the need for any retrofitting by the coal-fired power plant. It describes the finished product as a cellulose-based fuel using low value wood waste, such as forestry, pulp mill and sawmill byproducts. The finished fuel can be delivered in a range of different compacted formats such as pellets, granules, briquettes or bales.

The name AEG may ring a bell with some LSJ readers, as the magazine reported in 2014 that the company had developed a joint venture with three northern Alberta Metis communities and Ronald M. Derrickson, Grand Chief of British Columbia for Life, who is Chairman of the RMD Group, to monetize timber resources within their communities.

Shortly after that, a joint venture, KAQUO Forestry and Natural Resources Development Corporation, was launched. The goal was to both sell timber permits to the over 200,000 hectares of forest under Metis control as well as work with the communities on a variety of forestry-related manufacturing ventures. But the situation went sideways. The Alberta government stepped in with a Ministerial Order based on an independent review, demanding that more ‘due diligence’ be conducted to lay out the joint venture’s plans for managing the forest resource before it would allow development to proceed.

What ensued over the next three years was plenty of drama. There was considerable dialogue between the Conservative provincial government of the day, representatives of the Metis communities and AEG, as well as a decision by Derrickson to leave the joint venture, and eventually, the complete collapse of the joint venture.

Spinks describes the behavior of the Conservative government as nothing more than an unvarnished attempt to put the brakes on the joint venture. He says that AEG was notified by the government that because it was the Metis Settlements and not AEG that was being investigated, the government would not review their ‘due diligence’ documents on this endeavor.

“Some 6,500 printed pages of due diligence, prepared by three leading Canadian law firms, three independent forestry consultancies and verified by a global investment group managing over $50 billion using their own independent consultants,”—that’s how Spinks describes the material that AEG was eager to share with the Alberta government. “Due diligence cost (us) over $1.5 million.”

He says that government never did review AEG’s material. That lack of review was, in his opinion, to cover the government’s own mishandling of the issue.

However, this contentious relationship changed with the election of a new NDP government in Alberta. The Court also quashed two governmental Ministerial Orders related to the joint venture in May 2017, primarily because the joint venture no longer exists.

British-Based AEG is targeting Newfoundland for its first Canadian investment in its biofuel technologyEnergy company AEG says that it can use any wood fibre to produce its Coalswitch biofuel, including salt-saturated hog material commonly stockpiled on B.C.’s coast.

Spinks says that the new government is much more welcoming, even adopting a new policy of encouraging more aboriginal involvement in future renewable energy projects. And AEG itself has adopted a new approach in its dealings with the three Metis communities. Instead of working with all three communities at once, it is aiming for a more phased-in approach, choosing to work with one community at a time. But the goal is still to help all three Metis communities to eventually monetize their considerable timber resources and deploy AEG’s CoalSwitch technology. The community it is hoping to work with first is the Paddle Prairie Metis Community.

“Let bygones be bygones, is my position,” says Spinks, regarding what has occurred in Alberta. “We still care very much about our friends in the Metis Settlements in Alberta, and we still intend to operate a business with them.” Settlement representatives were in attendance at AEG’s launch of its biofuel facility in Utah.

There were many positive outcomes from the turbulence in Alberta, Spinks says, one being that all three communities now have forest management plans.

Since 2014, there has been an election at the Paddle Prairie Metis Community, with four new representatives on the five-person council, including individuals who have considerable experience in the forest industry. Representatives did attend the launch of AEG’s facility in Utah. When contacted by Logging and Sawmilling Journal, they said that there was nothing imminent between the community and AEG, and that based on what they witnessed in Utah, they will be carefully watching the evolution of the commercialization of the CoalSwitch technology as well as AEG’s plans for capital investment in Newfoundland to evaluate if further discussions with AEG are worthwhile. In the meantime, they have adopted an open door policy and are in early discussions with a number of companies interested in working with the community to help them develop their forest resource.

Spinks says that delays forced upon the joint venture partners by the Alberta government mean that business development with the Metis in northern Alberta is now further down AEG’s development plans. For now, it is focused on developing its Newfoundland project, where Spinks says they have found a government much more agreeable to work with because commercialization of the forest in the Northern Peninsula is to their mutual benefit.

The timberlands being made available to AEG in Newfoundland were turned back to the Crown by Corner Brook Pulp and Paper in 2010. According to a government assessment of the forest resource in that area, the timber is primarily smaller diameter balsam fir and black spruce. It is described as being difficult to monetize for solid wood products, making the AEG business proposal to use the wood primarily as raw material for biofuel production a good alternative.

British-Based AEG is targeting Newfoundland for its first Canadian investment in its biofuel technologySpinks says that AEG is currently involved in the negotiation and due diligence process with the Newfoundland government regarding their plans for a biofuel facility in Roddickton with the goal of achieving a full agreement very soon, adding that there is strong local support for what the company has planned.

“Everything is looking very solid there and I hope we will be announcing something in the very near future in terms of moving the situation on to more of a commercial footing,” says Spinks.

The Newfoundland and northern Alberta projects are just two of many potential projects that AEG is investigating in Canada. Spinks says since they now have a demonstration of their technology in Utah, he anticipates greater interest and faster development of future projects. One particular raw material source that is noteworthy and being investigated by AEG is the potential conversion of the large volume of salt-laden hog material on the B.C. Coast into biofuel using the company’s CoalSwitch technology. Spinks says that its technology is capable of converting this raw material into biofuel, which to this point, has proven difficult to accomplish because of its salt content. AEG claims that its process ‘cleanses’ the biomass raw material of salts, minerals and other contaminants before the conversion process.

 

Logging and Sawmilling Journal
March/April 2018

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