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National Post (Canada): Ottawa firm signs with Shell

Financial Post/National Post: Ottawa firm signs with Shell

Emily Mathieu
Published: Monday, June 12, 2006

Energy giant Royal Dutch Shell is in negotiations with a Canadian ethanol producer to purchase an innovative renewable fuel product.

“Shell is in discussion with Iogen, exploring options to develop large-scale production,” said Andy Corrigan, a Shell spokesperson.

Ottawa-based Iogen Corp., a biotechnology company whose major investors are Royal Dutch Shell, Petro-Canada, Goldman Sachs and Co. and the Canadian government, developed the process for cellulose ethanol.

They’ve been selling small batches from a demonstration facility in Ottawa for two years.

“I would expect that Shell would take 100% of the fuel that we would produce,” said Jeff Passmore executive vice president at Iogen.

Cellulose ethanol differs from ethanol or ethyl alcohol, which is made through the refinement of grain, corn, sugar or starchy vegetables like potatoes, because it’s made from non-food products like straw and corn stover.

Construction on Iogen’s commercial plant is scheduled for 2007 with production of 150 to 200-million litres annually of cellulose ethanol expected to start in 2009. Idaho and the the Canadian prairies are potential sites.

“We are working with governments in both Canada and the U.S. and it will come down to a business decision,” Mr. Passmore said.

If the plant is put in Canada Shell Canada Ltd., of which Royal Dutch Shell is a major shareholder, has expressed interest in investing in commercial operations. Mr. Passmore said he expects Shell Canada would be a major investor in any Canadian plant.

Iogen and Royal Dutch Shell, are scouting locations for plants in Germany and the U.S.

Royal Dutch Shell sold approximately 3-billion litres of bio-fuel, mostly in the U.S .and Brazil, in 2005. They first invested $46-million in Iogen towards commercial production in 2002.

Attention is nothing new for Iogen. Wall Street Firm Goldman Sachs and Co. invested $30-million in Iogen in May.

Petro-Canada invested $15.8-million in the company’s demonstration facility in 1997. They’ve since invested an additional $10-million toward technological development.

Mr. Passmore said it’s unlikely that relationship will extend to commercial production.

“Their plan is not to invest in the commercial facility, Shell wants to do that.”

“What exactly our involvement is going to be we are not sure,” said Jon Hamilton, spokesperson for Petro-Canada.

Ontario has committed to a mandatory mix of 5% ethanol in all gasoline sold across the province by 2007.

The Federal government has committed to a mandatory blend of 5% ethanol or biodiesel in all transportation fuels by 2010.

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