Investors rally around oil sands upgrader
Soaring costs for Alberta heavy oil upgraders have apparently not scared off all investors.
BA Energy, a start-up company, closed a C$115 million private placement financing deal for its planned Heartland facility that is budgeted to cost C$900 million in 2006 dollars.
BA aims to bring the first phase of the Edmonton-area plant on stream in 2008 at 77,500 barrels per day of bitumen blend and grow it in two more stages to 260,000 bpd. To date, BA has raised C$335 million in equity, covering a large portion of its needs and anticipates filing a preliminary prospectus in the fourth quarter for its initial public offering and hopes to raise C$360 million in debt.
All three phases of Heartland have Alberta Energy and Utilities Board approvals.
BA President Ray Cej is confident Heartland can meet the low-cost upgrading needs of oil sands producers.
With oil at a mere US$30 per barrel WTI and normal differentials between light and heavy oil of US$7-$8 per barrel, the upgrader will provide a 20 percent return.
—Gary Park
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