With Saskatchewan Premier Lorne Calvert standing by, on September 26 Husky Energy President and CEO John Lau officially opened a spanking new ethanol plant in Lloydminster. At full tilt, the in-for-a-penny, in-for-a-pound development is expected to pump out 130 million litres of ethanol manufactured from 350,000 tonnes of local prairie wheat grains every year – a minor portion of the 13 million tonnes of wheat grains (10-year rolling average) produced by Saskatchewan alone.

Husky’s timing seems propitious – the Harper government has promised legislation requiring that all gasoline sold in Canada contain at least five per cent ethanol by the end of the decade. It’s also a natural fit for Husky: besides the market-boosting federal announcement, Husky’s existing heavy oil upgrader footprint in Lloydminster puts the company squarely in the middle of western Canadian grain feedstocks and ready-made distribution networks.

“It was a market opportunity,” says Husky spokesman Dennis Floate. “We’d been providing western Canada with ethanol fuels under the name of Mohawk for six years, so we’re carrying on the tradition.”

Ethanol is poised to become a whole lot more than tradition. The biofuel has been touted as the fuel of the future, promising to ease pressures on fossil fuels, provide a domestic renewable source of petroleum, boost agriculture and cut greenhouse gas emissions.

Yet, discussions around the water coolers of the country, if not the continent, still propagate myriad myths and mysteries about ethanol: that it drives up grain prices; that the energy to manufacture every litre of it is more than the energy it produces; that emissions are no different or even worse, etc.

The one statistic that’s neither myth nor mystery, however, is that the U.S. today imports 65 per cent of its petroleum needs (see story this issue), and the Energy Information Administration (EIA) says that’ll climb to 71 per cent by 2025. That’s making ethanol the star of centre stage south of the border, where most of the action has been to date.

Indeed, when U.S. President George Bush signed the Energy Policy Act this August, creating a national Renewable Fuels Standard, he entrenched renewable fuel use: 4 billion gallons for 2006, growing to 7.5 by 2012, of which the vast majority will be ethanol. The 2006 target can be met with existing capacity – 2005 production was already 3.9 billion gallons from the country’s 101 ethanol plants. To meet the 2012 figure, capacity will nearly double.

And while it comprises only about three per cent of total gasoline-type fuel consumption, unlike the unrenewable source of gasoline, ethanol production can grow.

“Our farm and forestlands can supply enough feedstock to displace about 30 per cent of current U.S. petroleum consumption,” proclaimed U.S. Agriculture Secretary Mike Johanns at a recent press round table. “And we think that can be done by 2030 if the country is committed.”

All of which has ethanol producers drooling. It’s not only the Energy Policy Act but a federal subsidy of 51 cents a gallon and a 54-cent tariff on Brazilian ethanol, the world’s largest producer, that’s driving the industry forward. Companies like Archer Daniels Midland, the world’s largest processor of corn and wheat, have already joined the chorus with announcements to double capital spending on new ethanol and biodiesel plants. Aside from sending the company’s stock soaring, ADM has even hired a seasoned oil industry executive as new CEO.

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