The slurry “war”: Cold snap in the RNG industry

Through its subsidiary Nature Energy, Shell could receive hundreds of millions of dollars in public aid to produce renewable natural gas (RNG) in Quebec from agricultural residues. The Quebec biomethanation sector sharply denounces the red carpet that Énergir is rolling out, according to it, to Nature Energy by becoming its partner to transform agricultural waste into RNG.

Énergir announced on Tuesday that it was embarking on the production of RNG thanks to a partnership with Nature Energy, a Danish biogas giant recently acquired by Shell for two billion US dollars. A joint investment of one billion dollars will allow the construction of 10 mega-factories in the next few years. These are expected to produce up to 200 million cubic meters of GNR annually from slurry and manure. This agreement is the result of negotiations that began nearly a year ago, Nature Energy confirmed to To have to.

However, the announcement did not go through like a letter in the mail. The discontent is lively, palpable, among the Quebec producers of RNG who, for years, have been laying the foundations of the sector in the four corners of the province. “This announcement is a nuclear bomb in the industry,” says one of them. The duty spoke with a dozen leaders who, for fear of commercial reprisals, cannot speak publicly.

Because everyone has a business relationship with Énergir. The success of their projects depends on the distributor’s network. “I’m in shorts in front [Énergir] to beg him for an award that makes sense to the GNR. Any criticism from me would be detrimental. I am commercially muzzled, ”summarizes one of them.

In Quebec, Énergir is a must. The former Gaz Métro holds more than 95% of the province’s market. GNR producers have no choice but to negotiate with it to distribute their molecules and establish the price of their production.

The most critical speak of “betrayal” on the part of Énergir, others evoke a “loss of confidence”. Many mention an “appearance of conflict of interest” arising from the two roles that Énergir will have to assume. “I really don’t know how it’s going to be from now on. It is both our sole distributor, and it becomes our main competitor,” says a CEO who underlines in passing that Énergir has access to all the confidential and competitive information of their projects.

“We are aware that this is an announcement that has an impact, given our role in the industry,” said in an interview with the To have to Éric Lachance, CEO of Énergir. He wants to be reassuring: “In our governance, when we talk about GNR, there are clearly designated people at Énergir who take care of the purchase of the molecule [pour que nous puissions la distribuer dans notre réseau]. And these people cannot be part of the discussions on the production plan. “There will be” a wall of China “between these two teams at Énergir, he assures.

As for the presence of Shell, which bought Nature Energy less than a month ago? “We won’t begin to blame them for diversifying,” he replies, pointing out that other companies are doing the same. In October, British oil giant BP paid $4.1 billion to buy US RNG producer Archaea Energy. In November, it was BlackRock, a major asset manager present in hydrocarbons, which got its hands on the American GNR producer Vision Ridge Partners by paying 700 million US dollars.

As for the hundreds of millions of dollars that Shell could benefit from through its subsidiary, Éric Lachance believes that these potential sums must be viewed from another angle. “The GNR that will be produced will be consumed in Quebec. And if there is financial support, it will be for the benefit of Quebec consumers of GNR. »

Apart from the presence of Shell, Quebec producers feel that Nature Energy’s business model does not meet Quebec’s agricultural specificities. The Danish company specializes in megaprojects, whose production capacities are ten times higher. “It’s a monster that’s coming to Quebec and that we’re going to have to feed,” sums up a producer.

I really don’t know how it’s going to be from now on. It is both our sole distributor, and it becomes our main competitor.

In the communities where it will settle, this will translate into round trips of 100 to 150 trucks transporting agricultural waste such as slurry and manure. The mere presence of a mega-factory will create significant competition to establish agreements with farmers, producers say.

“We do not consider ourselves to be in competition,” retorts Marie-Ève ​​Tremblay, vice-president of Partnerships at Nature Energy Canada. There is enough biomass in Quebec to have plenty of biomethanation projects: small, medium and large. »

Nature Energy targets regions with high agricultural density, she recalls, considering the “fantastic Danish model” adapted to that of Quebec. “We estimate that the availability of biomass is two to four times greater than what is needed to operate one of our plants. So there is room for everyone. Éric Lachance, of Énergir, also believes that several models can coexist in the province and that the projects will be complementary.

As for the director general of the Union of agricultural producers, Charles-Félix Ross, he does not have a firm position. “Our reaction in the first place is the fact that it is a very ambitious project, to produce GNR on this scale. »

The arrival of such projects raises questions, he says, citing the supply challenge: “Take their first project in Farnham, you would have to fetch about a quarter of the slurry and manure produced in the area, which is a lot. Access to the resource will be a major issue. Two other smaller biogas projects are planned a few kilometers away.

Then comes the question of “the harmlessness of the digestate”, ie the quality of the material that will leave the factories to be spread on the land. Mr. Ross also raises questions about the possible impact of such digestate production within agricultural production: “Currently, there are agreements between pork producers, for example, for their slurry to be used as fertilizer on field crops. Agricultural production depends on this balance between the different resources,” he explains, indicating that we have to see how this large production can fit into the Quebec ecosystem.

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