A stalled upgrader project in Sturgeon County got a major boost from the provincial government today when Premier Ed Stelmach announced a deal with North West Upgrading to refine provincial bitumen.
The deal paves the way for the company to start construction on a 50,000-barrel-per-day upgrader in northeast Sturgeon County. The project is estimated to cost $5 billion and create 8,000 jobs at peak construction.
Announcing the deal, Stelmach said the province has often stepped up to encourage growth in an important industry.
“Albertans and their government have never been afraid to make bold decisions,” he said. “We had faith in the potential of the oilsands when no one else thought it was a viable resource.”
Citing his oft-repeated line that shipping bitumen out of province was the equivalent of a farmer selling topsoil, Stelmach said this deal was good for the long term.
“When we upgrade our own resources in our own province we are creating future prosperity. We are creating a value-added opportunity.”
The agreement details are complex, but essentially the province will pay North West for the cost of upgrading the province’s bitumen while sharing in the proceeds when the company sells its diesel on the open market.
The province will have the bitumen to transfer through its Bitumen Royalty In Kind program (BRIK), which was announced several years ago as part of the royalty review.
North West chair Ian MacGregor said with the deal in place the company would be able to complete detailed engineering and start the upgrader project.
“The contract we have signed with the province under BRIK allows us to start construction and we are going to do that immediately.”
MacGregor said the announcement was very important for the future of the industrial heartland and for Albertans.
“You are very lucky to be here today. History is being made,” he told the assembled crowd of provincial cabinet ministers, oil executives, municipal politicians and journalists. “It will create great value for Albertans.”
Sturgeon County Mayor Don Rigney was also enthusiastic about the announcement, noting the county had waited years for good news about its investment in the industrial heartland.
“This is really an exciting setup, we are going to have a lot more certainty now.”
Rigney said Sturgeon County is ready for the project and will be able to mitigate the impacts on citizens.
“We have spent a lot of time putting in roads and water and sewer, so it is there, we basically are ready to go, ” he said. “We have been very proactive.”
The 50,000-barrel-per-day project is just the first of three phases the company plans for the site, each with the same capacity. The deal with the province allows for an extension to cover phase two, but does not specifically include it.
The upgrader has received regulatory approvals from Alberta Environment and zoning changes from Sturgeon County. Canadian Natural Resources Limited is a joint partner with North West in the project and is committed to providing some of the bitumen for the upgrader as well as half of the project’s financing.
