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Ether plant proposal pits Sudbury against Ont. Hydro, province.

The Sudbury Regional Development Corporation claims that Ontario Hydro's refusal to buy power from a proposed mixed ether/cogeneration plant will mean the loss of a brand new industry and major economic spinoffs for the region.

Sunthetic Energy Inc.'s proposal to build a $700-million petrochemical complex is being thwarted by Hydro's claim that it currently has a surplus of electricity.

While Hydro previously actively pursued the purchase of energy from private cogeneration plants, the utility revised its plans in December because demand for electricity was decreasing.

Duncan Chisholm, a senior business co-ordinator with Hydro's non-utility generation division, says the utility is forecasting a surplus from the mid to late 1990s. He says the introduction of Sunthetic's power into the grid would increase hydro rates by one per cent across the province.

However, Paul Tosolini, a development officer with the Sudbury Regional Development Corporation (SRDC), downplays the importance of the cogeneration portion of Sunthetic's proposed plant.

Tosolini says the plant will concentrate on producing ether, not energy. The ether will be made by combining butane with ethanol and methanol.

Sunthetic hopes to take advantage of an expected ether demand in the U.S. starting in 1995 when the Clean Air Act will force ether to be blended with gasoline to reduce harmful exhaust emissions.

"It's a huge market, and it is going to grow," Tosolini says. "If we are saying no, we are saying no to a brand new industry."

According to Tosolini, the industry has tremendous spinoff effects, including research and development possibilities for Laurentian University.

The SRDC says Sunthetic's project would be the third-largest industrial-sector employer in the region, providing 250 jobs at an average annual salary of $50,000. Including the spinoffs, it would represent $158.4 million annually to the local economy.

Corn and grain trucked in from southern Ontario would be used in the fermenting plant to produce ethanol which would then be made into ether. Butane, a byproduct of natural gas, would be partially stripped of its hydrogen in a butane processing plant and be used to make the two ethers the plant would produce.

The project requires the construction of a $30-million natural gas pipeline from North Bay. Natural gas would be burned to create electricity and steam for the petrochemical plant.

Sunthetic president David Field says the 250-megawatt natural gas-fired cogeneration plant would help reduce the cost of producing ether.

So why not locate the plant in North Bay for the natural gas, or in southern Ontario for the raw resources?

"Sudbury was the only location where Hydro's policy was that of an open door," explains Field. "The premise was if you can't sell (power) to Ontario Hydro, sell to Inco and Falconbridge."

However, unless either mining company becomes a direct investor in the Sunthetic proposal, the project must still use the Hydro grid and be approved by the utility.

Eric Belford, president of Falconbridge's Sudbury division, says the company is not carrying on any discussions with Sunthetic.

However, in light of soaring hydro rates, the company is proposing to build its own 100-megawatt cogeneration facility at Kidd Creek in Timmins.

Tosolini says it is up to the government and Ontario Hydro to work with Sunthetic to make the project become a reality.

The results of a $350,000 feasibility study commissioned by Sunthetic, its partners, Kilborn Inc. and CMS Generation, and the Northern Ontario Heritage Fund, were expected to be released early this month.

Premier Bob Rae has made a commitment to form a committee of government ministers and deputy ministers to review the study.

Field hopes an agreement can be reached, and he does not rule out downsizing the cogeneration facility. However, if an agreement cannot be reached by the end of this month, Sunthetic says it will take the project to California.
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Title Annotation:Sudbury Regional Development Corporation
Author:Brown, Stewart
Publication:Northern Ontario Business
Date:Nov 1, 1992
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