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Alberta on the march with C$8.5B refinery, petrochemical plan
By Gary Park For Petroleum News
One of the boldest moves yet taken to move Alberta beyond being a mere extractor of raw resources is fast approaching serious decision-making.
Government and industry sources are indicating that the final touches are being put on an economic study of a possible C$8.5 billion refinery and petrochemical complex.
Sponsored by the Alberta government and 19 oil and gas producers, petrochemical manufacturers, pipeline companies and utilities, the research explores the viability of a coal-fired integrated refinery, upgrader, petrochemical and electrical generation facility in the Edmonton region.
If it goes ahead, the project could yield 450,000 barrels per day of gasoline, kerosene and diesel as well as producing petrochemical feedstocks, hydrogen, ammonia and 500 megawatts of electricity. Returns could reach 30% Houston-based engineer David Netzer, who is taking the lead role in the study, has hinted that such a project could be far more profitable than originally estimated.
He told the Calgary Herald the returns could reach 30 percent, almost three times greater than earlier projections, due partly to a sharp narrowing of the gap between bitumen and light sweet crude costs, the volume of high-grade diesel output from the refinery, the conversion of byproducts to petrochemical feedstocks and integrated, coal-fired power generation.
Taking into account all of those elements suggests the remaining hurdles are technical, not political, he said, insisting that building a refinery in Alberta is “far more economical” than building one in the United States.
Release of the latest findings is thought to be imminent, providing a business case for Alberta to start testing the response from potential investors. First new refinery in 25 years Not only would the complex be North America’s first new refinery in about 25 years, it might also cause several oil sands producers to rethink their plans for upgraders.
Canadian Natural Resources, NorthWest Upgrading, BA Energy, Petro-Canada, UTS Energy, Petro-Canada, Nexen and Total are all in various stages of developing upgraders, either as standalone facilities or integrated with oil sands projects.
Netzer believes some of these proposals will fold when faced with the higher rates of return being offered by the mega-project.
The venture is seen as a key plan in an integrated energy strategy being developed by Alberta Energy Minister Greg Melchin, who is resolutely committed to ensuring the province benefits to a greater extent from its hydrocarbon production.
He said recently that the government is eager to integrate the end use of oil, gas, bitumen, coal and coalbed methane.
“Our objective in Alberta is not just to be a raw resource extractor,” he said.
Among those involved in the government study are producers Petro-Canada, EnCana and Canadian Natural Resources, pipeline companies TransCanada and Enbridge, utility TransAlta, Nova Chemicals and fertilizer manufacturer Agrium.
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