The long-stalled North West upgrader in Sturgeon County is set to get a boost this morning with a deal for the company to upgrade bitumen from the province's bitumen royalty in kind (BRIK) program.
Premier Ed Stelmach and Energy Minister Ron Liepert have scheduled an announcement for 10 a.m. Wednesday about a value-added project and several sources have told the Gazette it will be about the North West project.
The announcement from the province was more cryptic, indicating the premier would be announcing a “new era in value-added development and clean energy production in Alberta.”
The government has been in negotiations with the company since August to upgrade up to 75,000 barrels of bitumen for the province.
The province is collecting those barrels as part of the BRIK program, which was announced as part of the royalty review and will see the government take bitumen in lieu of royalties.
At an industry conference in late January, North West Upgrading chair Ian MacGregor said the company was working on the details of the agreement with the government and expected a deal very soon.
“Everything is going fine. We are working through these things. They are very complicated agreements and we have to work through these things,” said MacGregor at the industry conference. “There have been thousands of man hours spent by lawyers on this thing so it is just not a simple project.”
Company officials were not available for any comment about the project yesterday.
The proposed upgrader has received regulatory approvals from Alberta Environment and zoning changes from Sturgeon County. Some construction could start this year with the bulk of the work ramping up in 2012.
Sturgeon County Mayor Don Rigney was also unable to confirm anything about the announcement, but said he would be at the premier's press conference.
“I have been invited and I intend to be there,” he said. “I am looking forward to it and I am very hopeful the premier will have good news tomorrow.”
The proposed upgrader would be built in three stages, each with a capacity of 50,000 barrels per day. The company already has a commitment of 12,500 barrels per day for each of their first two phases from their partner in the project, Canadian Natural Resources Limited, as well as a commitment from that company for half of the funding to build the facility.
Along with the province's commitment, the company would be able to complete the first two phases of the project with the amount of bitumen they are expected to be guaranteed. North West is a merchant upgrader and the company does not own any part of a mine.
The last estimate, which is several years old, pegged the cost of the facility at $4.2 billion and estimated it would generate 2,000 construction jobs for the first two phases.
The project is situated in northeast Sturgeon County on Highway 643 between Redwater and Gibbons.
The company intends to upgrade the bitumen and refine it to diesel at the site. It also has an arrangement to capture the carbon dioxide from the plant and sequester it underground.
The project is one of four upgraders originally proposed for Sturgeon County, but the only one that currently appears headed for construction.
