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Providing coverage of Alaska and northern Canada's oil and gas industry
September 2009

Vol. 14, No. 37 Week of September 13, 2009

Upgrader assets on auction block

The unraveling of once-promising plans to build a C$4 billion merchant upgrader in Alberta may be entering its final phase.

BA Energy, a unit of Value Creation, is ready to auction off the assets from its Heartland upgrader in a court-ordered disposal.

That comes a year after work was halted on what was seen by the Alberta government as a model of its efforts to keep more of the value-added end of oil sands production in the province.

The plant was originally designed to come on stream in three stages from 2009 to 2013, eventually processing 162,200 barrels per day of bitumen.

BA filed for bankruptcy earlier this year when faced with the prospect that the major lender to Value Creation was about to recall a US$507 million loan after BA was unable to repay a C$50 million loan.

Auction scheduled

An auction is now scheduled for Sept. 22 of more than 1,000 items.

At the same time a neighboring 900,000 barrel crude oil storage facility is being sold under a separate arrangement.

Also caught in BA’s downward spiral is Aux Sable Canada, which had almost finished work on a C$45 million plant to process the off-gas from BA’s upgrader.

The company said it is now looking for an alternative fuel source, confident that something will surface in time.

A spokesman for Alberta’s Industrial Heartland, which is promoting the advantages of building upgraders and refineries in the Edmonton area, said it now appears the Heartland site will be empty for years, with no certainty that BA will ever resume work on the project.

Value, meanwhile, is pressing ahead with plans for its own oil sands project, aiming to launch two 40,000 bpd phases into production in 2011 at a break-even oil price of US$40 per barrel.

—Gary Park






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