|
Alberta upgrader gets fresh chance
Gary Park For Petroleum News
Value Creation Inc., a privately owned company, is trying to turn the tide by opening talks with Asian and Canadian investors to revive plans for a heavy oil upgrader in Alberta that was mothballed five years ago.
While others, notably a joint venture by Suncor Energy and France’s Total, have backed away from plans to upgrade oil sands bitumen, VCI is holding out hopes that it might be able to negotiate a deal in the next few months to spend C$1 billion on an initial 77,000-barrel-per-day phase of the 260,000 bpd venture.
VCI Chairman Columbia Yeung said a number of options are on the table, including financing, equity partnerships and participation by offtake customers.
He said the discussions involve national oil companies and large conglomerates, but declined to be more specific because of confidentiality agreements.
Talks described as ‘advanced’ However, Neil Shelley, executive director of the Alberta Industrial Heartland Area, which is trying to promote the construction of upgraders and refineries near Edmonton, said VCI is engaged in “advanced” talks with firms from China, South Korea and Japan, some of whom have made site visits.
VCI and its wholly owned subsidiary BA Energy reached the halfway point in building an upgrader before the global economy collapsed in 2008, forcing VCI to see creditor protection.
Yeung said VCI needs almost C$1 billion in financial backing to complete the first phase of a facility to convert bitumen into synthetic crude and synthetic diluents and has received offers of bitumen feedstock from a number of companies.
He said that if a financing deal can be reached it would need only 18 months to complete construction.
Gil McGowan, president of the Alberta Federation of Labor — a leading advocate of keeping upgrading and refining functions in the province — said unfavorable price differentials between Alberta heavy crude and West Texas Intermediate crude are making projects that both extract and upgrade bitumen more financially viable.
| 