The Lloydminster ethanol plant purchased about 350,000 tonnes of grain annually, and its shutdown will leave some Saskatchewan and Alberta farmers searching for new markets.
Cenovus Energy will stop production at its Lloydminster ethanol plant on Dec. 15, 2026, removing a significant grain buyer from northwestern Saskatchewan and eastern Alberta.
The company confirmed the decision in a written statement, saying it followed an economic review of the facility.
“Following an economic review of the Lloydminster Ethanol Plant, we will stop operations at the facility on Dec. 15, 2026,” Cenovus said.
“We are working to transition ethanol plant employees to other roles in the company. The facility will be maintained as we evaluate future uses and options.”
Cenovus has notified suppliers, customers and regulators about the decision.
The company has not released details from its economic review or said how many employees are affected. It also has not announced a permanent closure or plans to dismantle the plant. Instead, Cenovus says it will maintain the facility while considering possible future uses.
The company has also said the decision is unrelated to U.S. tariffs.
A major local market for Prairie grain
The Lloydminster plant has purchased approximately 350,000 tonnes of grain annually from farmers in Saskatchewan and Alberta.
That volume made the facility an important delivery point for wheat, particularly wheat that did not meet milling specifications. It also purchased other grains, including rye, corn and triticale.
The plant’s location just east of Lloydminster gave farmers in west-central Saskatchewan and east-central Alberta access to an industrial buyer without necessarily having to move grain much farther to other domestic processors or export channels.
For some producers, the plant provided more than another delivery option. Its bids added competition to the local grain market and gave farmers a potential home for lower-grade or specialized wheat.
The effect of losing that buyer could therefore extend beyond farmers who delivered directly to Cenovus. Reduced competition may influence the bids offered by other grain companies, while producers carrying grain intended for ethanol production may need to find alternative markets.
Farmers may face higher transportation costs
The shutdown comes as farmers finish the 2026 harvest, creating an immediate marketing challenge for producers who expected to deliver grain to Lloydminster.
Farmers who cannot find another nearby buyer may have to haul grain farther, increasing freight, fuel and handling costs. Those added logistics could reduce the net return from crops that already trade at a discount to milling-grade wheat.
Devon Walker, an Agricultural Producers Association of Saskatchewan director who farms near Lashburn, said the loss of the plant will disrupt marketing plans for some area producers.
“To see it go is disheartening for folks, and it kind of throws a wrench in people’s marketing plans and their logistics,” Walker said. “It really changes how farmers are going to have to do their business.”
Some producers may continue growing ethanol wheat or other feed grains if they can secure another outlet. Others could shift acres into hard red spring wheat or alternative crops with more established delivery options.
Planting decisions for 2027 may depend on available local bids, transportation costs and whether another company expresses interest in operating the Lloydminster facility.
Plant produced ethanol and livestock feed
The Lloydminster plant opened in 2006 under Husky Energy and was acquired by Cenovus when the companies combined in 2021.
It had annual production capacity of approximately 130 million litres of ethanol and about 130,000 tonnes of dried distillers grain.
Dried distillers grain with solubles, commonly called DDGS, is a high-protein ethanol co-product used in livestock feed. The Lloydminster plant therefore supported markets on both sides of the agricultural supply chain by purchasing grain and producing a feed ingredient for livestock operations.
Cenovus operates another ethanol plant near Minnedosa, Manitoba. That facility will continue operating.
Before the Lloydminster announcement, Cenovus described itself as one of Western Canada’s largest ethanol producers. Its Lloydminster and Minnedosa plants had combined annual production capacity of approximately 284 million litres.
Ethanol not included in federal production incentive
The shutdown also arrives as Canada’s domestic biofuel sector faces pressure from imported fuel and competing policy supports.
The federal Biofuels Production Incentive currently provides support for eligible biodiesel and renewable diesel produced during the 2026 and 2027 calendar years. Conventional ethanol producers are not included in the program.
The federal government says the incentive is intended to help domestic biodiesel and renewable diesel facilities remain operational, protect clean-fuel supply-chain employment and reduce reliance on imports.
A 2026 Natural Resources Canada report, however, recognized that competitive pressure from U.S. biofuel policies and subsidies is constraining investment and threatening growth across Canada’s broader biofuels sector. The report discussed ethanol alongside biodiesel, renewable diesel, sustainable aviation fuel and other renewable fuels.
Cenovus has not publicly attributed the Lloydminster decision to a particular federal policy, imported ethanol or any individual market factor. The company has said only that the decision followed an economic review.
What farmers should watch
Producers who planned to deliver grain to the Lloydminster plant should review outstanding contracts and delivery arrangements directly with Cenovus.
Other developments to watch include:
- Whether local grain companies adjust bids after the plant stops buying grain
- How much farther affected farmers must transport feed or ethanol-grade wheat
- Whether 2027 cropping plans shift away from ethanol wheat, rye or triticale
- Whether an alternative operator shows interest in the facility
- What future use Cenovus identifies for the maintained plant
- Whether federal biofuel support is expanded to include ethanol production
For farmers in the Lloydminster region, the most immediate concern is finding a replacement market for grain already harvested or stored.
The longer-term issue is whether the loss of a major buyer changes crop selection, local grain prices and the economics of producing feed and ethanol-grade cereals across the region.