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Alberta picks upgrader winner
Gary Park For Petroleum News
A joint venture by Canadian Natural Resources and North West Upgrading is now the odds-on favorite to cross the finish line first in the Alberta Government Bitumen Stakes.
Since becoming stable mates in January, the two relegated the rest of the field to also-ran status in the pursuit of 75,000 barrels per day of royalty-in-kind bitumen being made available by the government to ensure a new upgrader was built in Alberta.
Now it’s just a matter of working out the details.
Energy Minister Ron Liepert said “it’s not yet a done deal, but I am committed to pursuing an agreement that’s in the best interests of Albertans.”
In other words, you can take this one to the bank, because there is no better and possibly no other realistic option for the construction of an upgrader that Liepert said is a key to his government’s goal of contributing value-added and clean-energy production to the Alberta economy.
Some sources estimate that the plan to build a facility to process 150,000 bpd of bitumen could carry a price tag of C$18 billion in three equal stages of 50,000 bpd each.
No government subsidies North West Chairman Ian MacGregor, happy to have emerged successfully from a long tendering process, said there will be no government subsidies, loans or equity in the final project.
“It’s really a commercial deal, where we are converting (the government’s) raw bitumen into diesel fuel,” he said.
Executives of Canadian Natural said the negotiations are now aimed at a 30-year agreement with the province that could see construction start in 2011 and take three to four years to complete. The facility, in which North West has already invested C$400 million, is expected to include carbon capture and storage capabilities to reduce greenhouse gas emissions.
Real Cusson, the company’s vice president of marketing, said Canadian Natural once considered partnering with United States refiners, but found the agreement with the province and North West to be a “strong strategic fit” that carries a homegrown advantage.
The government has indicated it will provide 37,500 bpd of feedstock for the initial 50,000 bpd phase of the proposed upgrader and match that contribution in the second phase, leaving Canadian Natural and other private producers to supply the balance.
The government did not identify other bidders, although Imperial Oil confirmed it participated in the process, while Suncor Energy was believed to have submitted a proposal.
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