North West Upgrader go for launch

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Construction of $5.7B project starts this spring

The North West upgrader is officially a go, officials announced this week, and that means big bucks for Sturgeon County.

North West Upgrading and Canadian Natural Upgrading Ltd. announced Thursday that they had officially approved construction of their new bitumen upgrader in Sturgeon County.

When complete, the $5.7-billion upgrader will process about 50,000 barrels of bitumen a day into diesel and other products.

It’s a great step forward for Sturgeon County, said Mayor Don Rigney, one that will benefit all of Canada. “It ensures that our kids and grandkids can live, work and play in this community and not follow our raw resources down some pipelines.”

This is the first major diesel refinery built in Canada in 30 years, Rigney noted, and it will let Albertans refine oilsands bitumen here instead of shipping it out of the country. “It’ll maximize the value we get from our raw resource.”

Experts predict the project could draw thousands of new jobs and billions in investment to the region. “The spinoffs will be huge,” Rigney said.

The upgrader itself has been in the works for about 10 years, and is located about 10 kilometres south of Redwater next to the Agrium fertilizer plant.

Originally slated for construction in 2008, it was all but shelved that year when the global recession sent oil prices plummeting.

Some $700-million worth of engineering work later, said North West Upgrading chair Ian MacGregor, and they’ve finally decided to start construction. “We always knew we were going to do this.”

There’s an enormous amount of oil in Alberta, MacGregor said, when asked why his company decided to build the project. Someone has to turn it into fuel and “we felt we could do as good a job as anyone else could,” he added

The upgrader will transform about 50,000 barrels of bitumen a day into about 40,000 barrels of diesel, said Doug Bertsch, vice president of regulatory affairs for North West Upgrading, some of which will be sold locally. This will rise to 150,000 barrels of bitumen a day if all three phases of the plant are built.

Phase one of the plant should create about 8,000 temporary and 500 permanent jobs in the region, he added.

The upgrader will be the first in the world to capture and sequester its CO2 emissions underground.

Through a deal with Enhance Energy, the plant will pipe its CO2 emissions about 200 kilometres south to an oilfield near Red Deer, where it will be injected underground to recover oil. That works out to about 1.2 megatonnes of greenhouse gas emissions buried a year, MacGregor said — equivalent to about two thirds of the upgrader’s greenhouse gas emissions.

Other plants, such as Agrium’s, can also feed into this pipeline, MacGregor notes, which can handle about 40,000 tonnes of CO2 a day. Every barrel of CO2 injected will yield about two barrels of oil, allowing Albertans to squeeze more crude out of their aging oilfields.

The decision to build the upgrader also means an immediate cash bonus for Sturgeon County.

Under a deal with the county that was renewed last May, the North West partnership group agreed to pre-pay $5,588,000 in taxes to help the county pay for the infrastructure upgrades needed to support the upgrader. MacGregor said he expected to get a tax bill for that amount from the county shortly.

The upgrader should add $5-to-$10 million a year to the county’s coffers once it’s running, Bertsch said. Had it been running last year, it would have added about $500 million to provincial coffers in terms of royalties.

Construction on the upgrader should start this spring, MacGregor said, and be finished by 2016.

Don’t expect much activity on the construction site this winter, he added. “It’s not a rush to get in the field.”

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Kevin Ma

Kevin Ma joined the St. Albert Gazette in 2006. He writes about Sturgeon County, education, the environment, agriculture, science and aboriginal affairs. He also contributes features, photographs and video.