Sturgeon County had every reason to celebrate on Tuesday when the multi-billion NWR Sturgeon Refinery delivered its first diesel to a Morinville UFA station amid much fanfare.
It is the first refinery built in Canada in 33 years, and it has been promised to process bitumen and deliver cleaner diesel. It is now churning out 15,000 barrels a day to be distributed throughout the region. Plans are for the plant to be in full operation next summer when it would convert crude oil into 81,000 barrels of diesel a day.
North West Refining president Ian MacGregor was all smiles. Sturgeon County Mayor Alanna Hnatiw said the plant raises the county’s profile and will contribute some $15 million in taxes to next year’s budget.
The $8.5-billion refinery has been an economic engine for the Sturgeon and area economy for more than six years. At peak construction earlier this year there were 7,500 workers on site. There are now 3,500 workers on site, but that will eventually drop to 400 permanent jobs.
What is not yet clear is whether Alberta taxpayers have much to celebrate about the multi-billion behemoth. Albertans have backstopped some of the debt, and have pledged to pay more than $25 billion in processing payments over 30 years.
This is the first Canadian refinery to be built under a public–private partnership, and some people have questioned the use of public money on a private energy project.
Two years ago former Alberta finance minister Ted Morton in 2015 called the Sturgeon refinery project “an economic boondoggle” with high risks for Alberta’s taxpayers. He suggested the province would not see a return on its investment and may not even break even.
If that is true, it may be more worrisome that MacGregor is now working on the next two phases of the project. Proponents of the plant say it makes every sense to keep the needed workers on site to build the next phases and keep the economy rolling. With a still recovering economy, the Alberta government might be tempted by the promise of thousands of jobs to plunge ahead.
But given the time and cost that it has taken to get to this stage, any further expansion should be made with extreme caution.
Witness the current phase one project. It was originally conceived in 2002, but not announced for Sturgeon County until 2011, a full 10 years later. At the time it was estimated to cost $5.7 billion. Now nearly seven years later it is estimated to cost about $8.5-billion.
A lot has changed in the world since then. There is more concern about the environment. Critics say that building refineries is out of step with current trends toward using less fossil fuels and more renewable energy sources.
We need to tread carefully. There are many questions going forward. Is this project’s expansion being contemplated in an era where there is more talk about electric cars and cleaner energy options? What other technologies might be in place five to 10 years from now before another phase could be on stream? These are the questions we need our government to be asking.