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Providing coverage of Alaska and northern Canada's oil and gas industry
September 2006

Vol. 11, No. 37 Week of September 10, 2006

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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