Just one day after Shell announced its intentions to buy Duvernay Oil Corp. for $5.9 billion, the mega-energy company is at it again: this time, Shell has announced an alliance with Ottawa-based biotech company Iogen Energy Corp.

Under the agreement, Shell has pledged a "significant investment" in technology development with Iogen, which operates what the company says is the world's largest cellulose ethanol demonstration facility in Ottawa. The arrangement will see Shell, who first took an equity stake in Iogen in 2002, increase its shareholding within the company from 26.3 per cent to 50 per cent.

"We are excited to see this expanded partnership", said Brian Foody, chief executive officer of Iogen, in a statement. "This transaction sets the stage for successful large scale cellulosic ethanol production."

Shell said the collaboration is important for its strategic investment and development program in biofuels, particularly 'next generation' biofuels using non-food feedstocks.

Cellulose ethanol is made from raw materials like wheat straw, and could reduce carbon dioxide emissions by as much as 90 per cent compared to conventional gasoline.

"This is a strong statement that Shell is committed to accelerating the development of cellulosic ethanol in collaboration with Iogen," said Graeme Sweeney, Shell executive vice-president of future fuels. "We have come a long way together already on this particular technology pathway for sustainable biofuel and we will be working ever closer to meet the technical and commercial challenges facing larger scale production."