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Aylmer ethanol plant in dispute for natural gas

Natural gas availability is at the centre of an appeal to the Ontario Energy Board by a farmer-led cooperative trying to complete construction on a new ethanol plant this summer.


March 7, 2008
By IGPC Ethanol Inc.

Topics

February 29, 2008

A farmer-led co-operative is appealing to the Ontario Energy Board to ensure that natural gas will be available when its $140-million ethanol plant in Aylmer is finished construction this summer.

IGPC Ethanol Inc., with 840 equity holding members mainly in Brant but also in Norfolk and other counties, is seeking an order to remedy a dispute over the size of a letter of credit that the co-op would have to post to secure the construction of a $9.1-million gas pipeline.

The pipeline is to be built and owned by Natural Resource Gas Ltd. (NRG) to bring gas to the plant. NRG recently informed the co-op that it would have to post a letter of nearly $32 million before the energy company would proceed with the pipeline's construction.

The co-op maintains it has to post a letter of credit for only $5.3 million, in addition to a payment of $3.8 million.

NRG officials have not been available for comment.

An Ontario Energy Board hearing was scheduled for March 6th in Aylmer. The co-op is hoping to start construction of the pipeline in mid-March but is beginning to fall behind, spokesman George Alkalay said in an interview.

Meanwhile, the plant's construction is continuing.

"We're hopeful that the worst we will have is that the pipeline will be delayed," said Alkalay. "We will get natural gas because the OEB is there to ensure the flow of energy. They simply wouldn't allow a situation where an important project fails because of this."

The co-op started construction of its ethanol plant in July 2007. That work is ahead of schedule. In June 2007, the firm was forced to seek an order from the energy board compelling NRG to comply with its agreement with the co-op requiring it to facilitate pipeline construction. NRG's initial defiance of the OEB order resulted in a $140,000 penalty being levied against that
company.

IGPC Ethanol Inc. is a subsidiary of Integrated Grain Processors Co-operative, whose members from five southwestern Ontario counties have invested about $48 million in the plant, which will process more than 15 million bushels of corn per year.

The province has committed $14 million in capital grants to the project from the Ontario Ethanol Growth Fund. There's also a $11.9-million federal government commitment.