Have politicians lost all sight of reality?
Can we not learn from past mistakes?
Are we really this crazy?
OTTAWA—The Alberta government said Wednesday it reached an agreement to support the construction of a C$5 billion (US$5.1 billion) oil-sands upgrader in the province in partnership with Canadian Natural Resources Ltd. and a private upgrader-technology company.
The plan to build the upgrader—which is a type of refinery used to process heavy oil-sands crude—is part of a plan by Alberta to capture more royalty revenue from the province's oil-sands region, which holds the world's second-largest reserves, after Saudi Arabia's.
"When we upgrade raw resources in our own province, we are building future prosperity," Alberta Premier Ed Stelmach said at a press conference broadcast near the project site in Fort Saskatchewan, Alberta. "This means that the bitumen that is extracted in Alberta will be refined here as well...it will add more jobs and increase resource revenue for the people of our province."
Under Alberta's royalty system, the province has a right to a percentage of the raw bitumen produced from the oil-sands industry. Bitumen is a thick and sulfurous oil product that sells at a discount to conventional oil, unless it is processed in an upgrader that converts it to more valuable, lighter petroleum products.
The upgrader will use advanced technology, including gasification that captures energy from the heaviest elements of oil-sands oil, as well as a carbon-dioxide capture technology that will be used for enhanced oil-recovery elsewhere in the province.
The first phase of the upgrader will process 50,000 barrels of oil sands a day into low-sulfur diesel, 75% of which will be from the Alberta government's royalty oil and 25% from Canadian Natural Resources' production. The first phase is expected to be complete in mid-2014 and to provide 8,000 construction jobs in the province over two-and-a-half years.
The project could be expanded in additional phases to 150,000 barrels a day, for a total cost of roughly C$15 billion.
Alberta will provide C$4 billion in debt financing for the upgrader. The remaining C$1 billion in costs will be born equally by Canadian Natural Resources and North West Upgrading Inc., which will own and operate the upgrader in a 50-50 joint venture.
Alberta will pay off the debt used to finance the upgrader through a tolling arrangement over a 30-year term.
The upgrader will capture carbon dioxide during the oil-sands-refining process. The captured carbon from the upgrader, as well as from a nearby fertilizer plant owned by Agrium Inc., will be piped to conventional oil fields in southern Alberta, where it will be used to repressurize the reservoirs and produce more oil.
The government believes it can capture an extra C$25 billion in royalty revenue from extra oil that can be recovered through enhanced oil recovery using carbon dioxide pumped underground and permanently stored in oil reservoirs.
Write to Edward Welsch at edward.welsch@dowjones.com
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
Can we not learn from past mistakes?
Are we really this crazy?
OTTAWA—The Alberta government said Wednesday it reached an agreement to support the construction of a C$5 billion (US$5.1 billion) oil-sands upgrader in the province in partnership with Canadian Natural Resources Ltd. and a private upgrader-technology company.
The plan to build the upgrader—which is a type of refinery used to process heavy oil-sands crude—is part of a plan by Alberta to capture more royalty revenue from the province's oil-sands region, which holds the world's second-largest reserves, after Saudi Arabia's.
"When we upgrade raw resources in our own province, we are building future prosperity," Alberta Premier Ed Stelmach said at a press conference broadcast near the project site in Fort Saskatchewan, Alberta. "This means that the bitumen that is extracted in Alberta will be refined here as well...it will add more jobs and increase resource revenue for the people of our province."
Under Alberta's royalty system, the province has a right to a percentage of the raw bitumen produced from the oil-sands industry. Bitumen is a thick and sulfurous oil product that sells at a discount to conventional oil, unless it is processed in an upgrader that converts it to more valuable, lighter petroleum products.
The upgrader will use advanced technology, including gasification that captures energy from the heaviest elements of oil-sands oil, as well as a carbon-dioxide capture technology that will be used for enhanced oil-recovery elsewhere in the province.
The first phase of the upgrader will process 50,000 barrels of oil sands a day into low-sulfur diesel, 75% of which will be from the Alberta government's royalty oil and 25% from Canadian Natural Resources' production. The first phase is expected to be complete in mid-2014 and to provide 8,000 construction jobs in the province over two-and-a-half years.
The project could be expanded in additional phases to 150,000 barrels a day, for a total cost of roughly C$15 billion.
Alberta will provide C$4 billion in debt financing for the upgrader. The remaining C$1 billion in costs will be born equally by Canadian Natural Resources and North West Upgrading Inc., which will own and operate the upgrader in a 50-50 joint venture.
Alberta will pay off the debt used to finance the upgrader through a tolling arrangement over a 30-year term.
The upgrader will capture carbon dioxide during the oil-sands-refining process. The captured carbon from the upgrader, as well as from a nearby fertilizer plant owned by Agrium Inc., will be piped to conventional oil fields in southern Alberta, where it will be used to repressurize the reservoirs and produce more oil.
The government believes it can capture an extra C$25 billion in royalty revenue from extra oil that can be recovered through enhanced oil recovery using carbon dioxide pumped underground and permanently stored in oil reservoirs.
Write to Edward Welsch at edward.welsch@dowjones.com
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
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